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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Karl Radke who wrote (27882)	12/14/1997 5:28:00 PM
From: Larry J.	Read Replies (2) \| Respond to of 61433

<<<Why buy a stock when its 1997 projected EPS is to be 1.05 and fiscal 1998 is to be 1.15.>>> 2 Reasons: 1. The 1998 earnings estimates are too low. Once this becomes apparent to the street, earnings revisions and upgrades will follow en masse (analyst herd mentality). Furthermore, while your numbers quoted are the First Call numbers cited, Zacks Investment survey has them @ 1.07 '97 and 1.20 '98. (We also just saw Furman Selz come out w $1.25 on 12/3). The growth rate quoted (1st Call) is 35%. This is simply inconsistent with 10% growth in earnings. One of them is wrong, and I argue that its the consensus estimate not the growth rate. (ASND mngt. itself has forecasted high single digit quarterly sequential growth the first half followed by 10% in the second, equating to 38% or so). Look for '98 estimates to be revised upwards to 1.45 following ASND's earnings release on Jan.20. Even at the same PE ASND trades at today (23.5 x 1.15) the share price will be $34. A bit further out, ASND will command a higher PE following a few consistent quarters. A PE of 26 - 28 is still fairly conservative and nets a share price of $38 - $40. 2. A buyout is still a very real possibility. ASND is the bonified market leader in several of the markets they serve. Several of the big boys that have deep pockets (LU, CPQ, IBM, NT, INTC) have stated again and again that they want to either expand into or vastly enhance there networking product offerings in a big way. ASND would represent a hell of a beachhead. An aquisition price of $40 would be the absolute minimum that Ejabat and co. would let ASND go for. All my opinion of course. Larry

To: Karl Radke who wrote (27882)	12/14/1997 5:33:00 PM
From: Gary Korn	Read Replies (1) \| Respond to of 61433

Hey, i've got a question for the longs. Why buy a stock when its 1997 projected EPS is to be 1.05 and fiscal 1998 is to be 1.15. Correct me if i'm wrong, but i don't see the value in buying a stock with such a high forward-based p/e when it's growth rate is supposed to be merel;y 10%. Also, looks to me like the market doesn't smell any kind of buyout at $40/share. Last time I checked, ASND was about 30% under that ... 1. At FY97=1.06 and a stock price of about 27, ASND has a trailing p.e. of 25, the lowest of all the network stocks save Cabletron. 2. ASND mgmt has already indicated comfort with the 4Q number of .23, and is likely to beat that number by a penny or more, further cementing or improving the current p.e. based on 1997 earnings. 3. ASND mgmt has indicated comfort with the 1998 number of 1.15, which is extremely early in the cycle and, hence, extremely conservative. To obtain a forward p.e. of 25 based on the 1.15 figure, ASND would have to trade at 29. 4. Any improvement in 1998 earnings would only make the stock more attractive, as the forward p.e. would drop still more. In this regard, mgmt has said to expect revenue increases of 5 to 10 percent during the first 2 quarters of 1998 and over 10 percent for each of the last 2 quarters of 1998. That should translate into earnings for 1998 well in excess of 1.15. 5. Glenn Rudolph once explained how to figure fair value for a stock based on anticipated earnings. Maybe he can do that again for the thread. 6. As for acquisition value (something that should be considered as consolidation in this sector is quite possible), ASND now has a market cap of $5.4Billion, which is about 4 1/2 times sales. ASND bought CSCC at 10 times sales and LU bought Livingston at about 9 times sales. If ASND were to be sold at 8 times sales, that would price its stock at 48/share. 7. As noted above, ASND is predicting a revenue increase approaching 40% next year. This would translate to sales by the end of 1998 of over $1.6Billion. Eight times forward sales of 1.6B is 12.8B, which translates to a potential buyout price of $64/share by the end of next year. 8. Larry J. just said it better than this post. Look back one post (though, on the acquisition front, I still doubt the company would be sold for anything less than about 50/share). 9. In sum, the prospects for ASND look pretty good long term. Gary Korn

To: Karl Radke who wrote (27882)	12/14/1997 7:00:00 PM
From: sunfish	Read Replies (1) \| Respond to of 61433

You already have two information filled posts from knowlegeable ASND watchers giving you good reasons to buy ASND at these levels. Another reason to buy now is that everyone else agrees with you and has for some time. If they didn't, ASND wouldn't have travelled from 80 to the mid-20's and hung out. My strategy is to BUY basically sound companies when everyone is convinced by well-reasoned, street generated (manipulated?) expectations that permanent disability has arrived. Watch out for the pendulum, it's sharp on both sides.

To: Karl Radke who wrote (27882)	12/14/1997 10:15:00 PM
From: Glenn D. Rudolph	Respond to of 61433

Microsoft and Telcos Look to ADSL To Enable the Multimedia Future of the Internet PR Newswire - December 14, 1997 17:18 AIT BEL GTE MSFT SBC %MLM %TLS %PDT V%PRN P%PRN Broadband ADSL Services Will Bring Continuous, High-Speed Internet Access to The Mass Market, Enabling a New Constellation of Multimedia Services SAN FRANCISCO, Dec. 14 /PRNewswire/ -- The multimedia future of the Internet and the continuing convergence of communications, information and entertainment will be enabled by broadband asymmetric digital subscriber line (ADSL) services, according to Craig Mundie, senior vice president of Microsoft's consumer platforms division. ADSL is a modern technology that provides high-speed digital transmission over the 750 million ordinary phone lines crisscrossing the Earth at speeds more than 25 to 100 times faster than today's new 56.6 Kbps modems. Extensive international ADSL technical trials now are moving rapidly to worldwide market trials and initial service deployments throughout 1998. "The world wants high-speed access to the Internet and more. It expects its PCs to become multi-function household and office appliances, providing new and faster services for communications, information and entertainment," said Mundie in his keynote presentation at the ADSL Forum Summit meeting in San Francisco last week. He told the audience of nearly 450 executives and professionals from the communications and computer industries that all future Microsoft Windows operating systems will incorporate support for ADSL technology. Mundie, who has been using ADSL in his home during the past year, added that the powerful advantage of the technology's "always-on" feature shouldn't be overshadowed by its broadband speed. "It's just as important to be continuously connected as it is to be connected at high speeds. ... (Together both features) fundamentally change the way in which people perceive the Internet and the appliances connected to it." Mundie reported that Microsoft (Nasdaq: MSFT) was ramping up its ADSL trial with GTE during the next several weeks to include more than 1,000 homes and use of 6 Mbps ADSL. Microsoft is a member of the ADSL Forum, which is comprised of nearly 300 member companies representing all sectors of the world's computer and communications industries. Telephone company representatives speaking at the ADSL Forum Summit last week called ADSL deployments a "strategic imperative" as the most viable means of providing a host of new broadband services to consumers, telecommuters, branch offices and small businesses. "Customers need ADSL, want it, use it and love it, and they are willing to pay for it," declared Phillip Skeba, Ameritech's Manager of Strategic Standardization Management. He said that later this month Ameritech (NYSE: AIT) will move from ADSL market trials to a limited commercial service launch, with general availability in 27 target markets slated for mid-1998. Flynn Nogueria, director of data services for GTE Communications Corp., said, "I can't ever remember a new product being better positioned (for mass market penetration) .... My 81-year-old grandmother wants ADSL (fast access for her new WebTV)." GTE recently announced limited commercial deployment of ADSL services within office buildings and apartment and condominium complexes. The carrier plans to convert its four ADSL trials to commercial service during the first quarter of 1998. Alan White, project manager with BellSouth's advanced networking division, reported that the carrier will deploy commercial ADSL services in its top six metropolitan area markets during the second quarter of 1998, with a total of 30 metro areas to be served by year-end. "Customers want this service desperately," he added. Frank Nelson, director of DSL product management for Bell Atlantic (NYSE: BEL), said that his company will begin commercial deployment in mid-1998. SBC Communications (NYSE: SBC) also plans mid-year ADSL deployment, reported Mike Powell, the company's DSL marketing manager. Daniel Briere, President of TeleChoice, a leading telecommunications market research firm, predicted an ADSL ramp-up in 1998 with "real mass orders" coming during 1999. "I'm a firm believer that ADSL is here to stay and is a logical way to get high bandwidth to residential and some business subscribers," he said. To learn more about ADSL and the ADSL Forum, visit the Forum web site at www.adsl.com or call 510-608-5905. SOURCE ADSL Forum /NOTE TO EDITORS: Use of quotations in the preceding news release is not intended to imply endorsement or sponsorship of the ADSL Forum or ADSL technology by any named individual or organization./ /CONTACT: Ann Jansen of ADSL Forum, 503-648-3545, or annjansen@compuserve.com/ /Web site: adsl.com (AIT BEL GTE MSFT SBC)