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

To: Jurgen who wrote (31329)	1/20/1998 10:57:00 PM
From: jim detwiler	Respond to of 61433

there are broader implications for the sector. First, Cisco hasn't knocked out these two rivals with price competition. Second, despite the worries about a seasonal January slowdown, phone carriers are still spending lots of money on data networking products. Finally, companies with Asian exposure can compensate with sales in Europe and North America. The gross margins indicate that the price competition hasn't bludgeoned profits just yet. Ascend held its gross margins at 64%, off only a hair from the prior quarter, One pro found incremental evidence of strong overall demand for networking products -- namely, phone carriers are investing heavily in Internet equipment. "Here's another company confirming strength in the carrier space," says noted analyst Peter Swartz at Salomon Smith Barney, who raised his rating on Ascend last week partly because of a strong demand among phone carriers for data products. Shares of Ascend jumped on Swartz's upgrade. Salomon has not been a lead underwriter for Ascend in the last year. Indeed, phone carriers helped Ascend increase its revenue from "asynchronous transfer mode" or ATM products by 75% from the third quarter. Lucent (LU:NYSE) also reported Tuesday that carriers continue to purchase large volumes of product -- though largely phone rather than data gear -- which helped it top quarterly estimates by a wide margin. In late 1997, Cisco stock climbed to all-time highs while its rivals weakened from Asia acquisition-related issues. Tuesday's reports indicated that the trend has eased. Swartz, for one, sees no further disruption in the balance of power among networkers. And while Ascend execs reiterated in the conference that Cisco is the company to beat, their own margin protection and sequential recovery indicate that the company hasn't rolled over. Then there is Asia. "This round of calls is suggesting that any weakness in Asia is offset by strength in North America and Europe," says Vijay Rajamani, analyst at Cowen. He referred also to the morning profit report from Hypercom (HYC:NYSE), a builder of network software for corporations. While his firm brought Hypercom public, it has performed no underwriting for Ascend, Bay or Cisco. Ascend stated that revenue from Asia declined sequentially -- Japan, for example, slipped sequentially from 13% of total business to 5% -- but that overall its international sales were roughly flat.