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

To: Sector Investor who wrote (33849)	2/7/1998 11:42:00 AM
From: Perry	Read Replies (1) \| Respond to of 61433

Some interesting reading from Smart Money. Since you must be a subscriber I have only posted pieces of the original article. The whole article is generally bullish with warnings of volatility and the possibility of prices reflecting the positive outlook. However, they had buy recommendations on CSCO, ASND among others... I have posted this on the CSCO site as well. Perry <SECTOR BENCHMARKS OUTLOOK After a brutal spring, the second half looks better for this roller-coaster sector. Look for 30% average earnings growth in '97 and more consolidation. KEY COMPANIES Cisco Systems, 3Com, Ascend, Cabletron... HOW TO VALUE A classic momentum sector. For value, look for those companies with P/E's well below historical averages and growth rates. CATALYSTS FOR GROWTH The demand for fast connectivity across networks and the Internet. Enough said. DANGER SIGNS Several of these companies are counting on new products to boost second-half sales. Will the market embrace them? < Few sectors offer investors as much opportunity -- or as much treachery -- as networking. Investors in the group have gone from peak to valley to new highs in the course of 1997. During the networking sector's April lows, shares of industry leader Cisco Systems Inc. (CSCO) were off over 30% from 1996 year-end highs. At a recent 83, Cisco is now up over 10% from its 1996 high. It's not as strange as it looks. The only thing clear is that the factors contributing to the industry's torrid growth over the past few years show no signs of abating, while the uncertainty that roiled these stocks this spring has subsided. "As long as there is demand to move data and bytes at faster and faster speeds, this industry will grow," insists Noel Lindsay, an analyst with Deutsche Morgan Grenfell. It wasn't so cut and dry a couple of months ago, as issues of product transitions, industry consolidation, and the threat of competition from the likes of Intel Corp. (INTC) and Microsoft Corp. (MSFT) spooked investors. While some fears have diminished, the uncertainty that comes from product transitions is still the sector's chief problem. In the spring, demand was held in check by competing solutions for the same problems. Take the router business. Industry leader Cisco owns 60% of the worldwide market for these devices, which collect and distribute data across a network. But Ascend Communications Inc. (ASND) currently has a faster device that may be stealing sales. Cisco promises that its Gigabit Switched Router (due this fall) will be even faster. But until Cisco's claims can be proven, customers don't know how to react and many are delaying decisions. "All the executives that I've spoken with tell me that demand is still there," says Bear Stearns analyst Eric Blachno. "What's changed is that the evaluation period has gotten longer."> < If it can get its new products out the door, analysts expect Cisco will grow earnings at a 35% clip over the next year or so. And as 3Com and Ascend absorb their acquired assets, the strength of those combinations should become clear.> <Analysts expect a stronger second half in terms of industry performance as some of the product issues clarify and demand picks up. But the runup in the shares already reflects the renewed confidence in the networking industry's growth. Look for demand to come from the telcos -- witness the ascension of Ascend's stock price -- which want to increase the capacity of their twisted copper wire infrastructures.> < we believe Cisco -- a company that dominates one of the key industries of the present and future -- represents a fine long-term investment, we also warn that it will experience violent swings in value along the way. >

To: Sector Investor who wrote (33849)	2/7/1998 3:42:00 PM
From: sepku	Respond to of 61433

>>>I agree with you on ML, but the following day is too soon, don't you think?<<< That's true, and I was contemplating just that. I figured that most of the positive results from a ML upgrade would occur within two trading days of it hitting the wires, and I wouldn't want to be left holding the bag when the smart money runs for the exits. Perhaps selling in stages would be more prudent... >>>Didn't ML upgrade CSCO pre-split when CSCO was in upper $70s with target of $100? Post-split that would be $66. Didn't they just raise that now to $75? ($115 pre-split).<<< That's exactly the case I was thinking about. I don't recall ML issuing a target with that CSCO upgrade...they seldom do (I still believe that the presence or absence of a target price lends an important clue as to whether the up/downgrade is sincere or a ploy. When a target is stated, they require reasons for such specifics). CSCO was in the upper 80s when ML upgraded it to strong buy (?). Cramer had been consistent in his opinion that CSCO was a stock you buy/hold for 3 to 5 years. Then as soon as the ML upgrade hit the wires and CSCO pushed 90, he announced a couple days later he had sold (or greatly reduced) his position. That can't be a coincidence considering ML's reputation...being a fund manager himself, Cramer likely knew exactly what to make of that move by ML. The day Cramer was on CNBC announcing his sale, CSCO began to retrace sharply to 72 within a week or so. So if Cramer and ML were dumping CSCO shares, it must have began immediately following the upgrade. So perhaps selling into the initial buying spree immediately following an upgrade is wise? Style Pts.