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

To: Gary Korn who wrote (31327)	1/20/1998 10:56:00 PM
From: Sector Investor	Read Replies (3) \| Respond to of 61433

Again, nice job Gary! At first I was disappointed with the $0.24, but then I realized that this was EXACTLY what ASND guided analysts to this quarter. I think that this will be the case from now on. So, therefore I will state that earnings for Q1 WILL be $0.25. Not a penny more or less - unless Worldnet or other major contract is announced and Ashby utters a different number. This CFO will TELL YOU THE EXACT NUMBER well in advance, just pay attention. Forget about Asia or anything else. NOTHING (well almost nothing) will take this earnings lower and only another major contract takes it higher. ASND is now positioned so that if one sector slows down they have enough backlog to compensate. No more back-ended quarters, no more struggle to make earnings. So, there you have it.

To: Gary Korn who wrote (31327)	1/21/1998 1:10:00 AM
From: Roadkill	Read Replies (1) \| Respond to of 61433

>>There must be some significance to the fact that ASND is now officially a billion dollar company.<< Some "mid-cap" mutual funds have guidelines prohibiting investment in companies with either revenues or market caps below a certain amount. The billion-dollar threshold that ASND just passed may now make it an investment option for some of those funds. I'm trying to figure out when ASND's PE may begin to expand past 30-35, which seems to be tough to break. Understandable, based on last Q's debacle. My best guess, based on management's guidance, is that this expansion will occur sometime in the 2Q or early 3Q of 1998 (barring a bear market, of course). Management predicted .25 for 1Q, leaving .91 for the 2Q-4Q '98 (based on $1.16 1998 FY estimate per Ashby). Based on the predicted "sequential" revenue growth picking up in 2H 98, and based upon the linear digression of gross margins, the last three Qs of 98 may look something like this: 2Q 1998: .27 (vs. .31 in 2Q 1997) = -12% EPS growth 3Q 1998: .30 (vs. .20 in 3Q 1998) = 50% EPS growth 4Q 1998: .34 (vs. .24 in 4Q 1998) = 42% EPS growth This assumes that ASND does not beat estimates in any given quarter, which it is likely to do if the new GX500 etc products are as good as advertised. In any event, if Ashby is right, the 3Q and 4Q results from 1998 should permit ASND's PE to expand to >40 (barring a bear market, etc.). Because the stock market generally looks ahead about 6 months, and assuming that the Street finds Ashby as credible as I do, we might expect a sustainable PE expansion sometime in the 2Q or early 3Q 1998. Before then, it will be difficult for the stock to get, and stay, above $40, barring a major announcement. I'm not predicting a 50 or 60 PE or anything of the sort (again, barring major news). It would be nice to achieve and sustain a healthy 40-45 PE, however. I'm long and willing to wait. Just MHO.