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

To: Bald Eagle who wrote (31340)	1/20/1998 11:38:00 PM
From: Matt Webster	Read Replies (2) \| Respond to of 61433

Random Thoughts on DSL and How Networkers Can Manage the "Problem"... The problem is that telco's are not interested in DSL service at $50/month replacing T-1 and high-end frame relay service at $1500/month. This is the same issue ISDN faced, as ISDN at $50/mo was not going to make telcos who sold Switched 56 at $300/mo look good. The solution is to make DSL into a differentiable "consumer" technology. The telcos would be happy if DSL was not routable by default, meaning that it would not be possible to sit a router between a private LAN and a cheap DSL connection to the Internet, like can be done now with ISDN. All PAIR or whoever would need to do is cooperate with the RBOC's so that DSL service would not be cost effective to enterprise customers. If enterprise customers wanted a DSL router, then they would have to pay extra for that quality of service. There is no reason to think that RBOC's could not cooperate with networkers. Discriminatory pricing is not new to RBOC's, after all. This is the obvious answer to the RBOC dilemma. Any comments? Matt

To: Bald Eagle who wrote (31340)	1/20/1998 11:39:00 PM
From: Sector Investor	Respond to of 61433

From the Yahoo ASND board. It explains the 12/15/97 accounting change for diluted earnings. This post from the SUNW board might answer your question/ :Business and Finance:Stocks:Technology:Computer Hardware:SUNW (Sun Microsystems Inc) <- Previous Next -> Message 1023 of 1027Reply Subj: Diluted Shares By: rezaa Date: Jan 20 1998 1:46 P.M PST Reply To: Msg. 1 by YahooFinance Posted at 11:01 p.m. PST Sunday, January 18, 1998 Investors should heed diluted earnings BY ADAM LASHINSKY Mercury News Staff Writer It's earnings-reporting season, and all investors -- but especially those who load up on technology stocks -- need to pay attention to an important accounting-rule change. Now, before allowing your eyes to glaze over, consider this: Ignoring the change may lead you to believe companies you've invested in are more valuable than they are. The change has to do with how publicly traded companies report earnings per share. Traditionally, companies simply disclosed net income divided by shares outstanding to get per-share earnings. But that simple calculation doesn't account for stock options and other securities, like warrants, that can cause the share count to rise over time, thus diluting earnings attributed to each share of stock. Since EPS is the most important factor in determining a company's market value, getting a realistic read on it is no trivial matter. So as of Dec. 15, the accounting profession requires companies to report only two types of earnings per share, basic and diluted. Basic doesn't account for options, and diluted does. ''In (the fourth quarter) if companies use the basic EPS figure as their headline earnings figure, their earnings may appear to be artificially boosted as a result of this arithmetic rather than fundamentals,'' says Gabrielle Napolitano, vice president of investment research for Goldman Sachs & Co. in New York. The new reporting requirements are particularly relevant for technology companies because they rely so heavily on stock options to compensate their employees. For some, the new rules won't make much of a difference because they already report their earnings on a fully diluted basis. Now, however, investors will be able to compare apples to apples. The difference between basic and diluted earnings per share often is significant. Three tech companies that reported earnings last week illustrate the point. At Apple Computer Inc. (Nasdaq, AAPL), quarterly earnings of 33 cents on a diluted basis was 11 percent less than the 37 cents of basic EPS. The number is so much lower because Apple uses 11.9 million additional shares to calculate its diluted earnings, reflecting employee stock-option packages. Diluted earnings per share at Sun Microsystems Inc. (Nasdaq, SUNW) were 5 percent lower than basic EPS, and for Intel Corp. (Nasdaq, INTC), the diluted earnings per share were 8 percent less. The difference is so important that some earnings watchers advocate not even paying attention to the figure that doesn't reflect option grants. ''Basic (EPS) is essentially irrelevant,'' argues Charles R. Hill, director of research for First Call Corp. in Boston. First Call collects projections by analysts of earnings performance, which it reports as the carefully watched ''consensus'' expectations on Wall Street. It's also important to understand that the increase in shares outstanding to calculate diluted EPS reflects only ''in-the-money'' options, or options priced at or below a stock's price in the market. That way options far above market value that may never be exercised won't affect the presentation. By the way, all earnings reports in the Mercury News reflect earnings per share on a diluted basis.