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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: The Phoenix who wrote (12509)	2/17/1998 4:24:00 PM
From: sepku	Read Replies (1) \| Respond to of 77400

>>>Even so, thanks for the article...it was most enlightening - the fact that ASND is refocusing their business on the ATM piece and less on RA is VERY interesting and a fact that I was not aware of.<<< There is another article you may be interested in by Jubak on Microsoft Investor today: investor.msn.com Here is an excerpt where Jubak sums up what went wrong with ASND's RA biz. It is particularly enlightening, because it shows exactly how ASND's management botched a commanding lead in marketshare, allowing CSCO to seize enormous advantage (practically non-contender to #2 or #3), forcing ASND to find growth elsewhere (FR/ATM) -- which ironically, may prove to be for the best in the long-term. I'm not sure whether ASND would have refocused so strongly towards the CSCC side if it wasn't forced to do so, or whether it could have retained leadership in RA as well as the initiative in ATM. I guess we'll never know...but either way, this explains why the change in strategy by the company: >>> "I wanted to buy Ascend because it had a huge market-share lead in the remote-access concentrator business. Ascend's products allow Internet service providers like America Online (AOL) to put in a single box hundreds of the modems that connect customers to their Internet gateways. They're tough products to build because they have to be able to speak multiple Internet "languages" such as ATM, Ethernet and T1. But I thought that just solidified Ascend's position. In October 1996, Ascend owned 56% of this market, more than twice the share of closest competitor US Robotics. "Then, disaster. Management botched the introduction of its new MAX TNT product. The new concentrators wouldn't talk properly to 56K modem cards. The problem was most severe in Europe, where the company has more customers and faces a complex set of competing standards. And worst of all, management didn't come clean with Wall Street -- either because the company's financial controls were so bad that management didn't know that business had tanked, or because it arrogantly thought it could fix the problem before it became public. "That's all history. But it's relevant to how I value the stock in the future. Ascend has brought in a new, experienced chief financial officer who seems to have brought better order to the company's reporting systems. But otherwise, it is still run by the same management team that managed to dissipate the company's commanding lead in its category. "While Ascend fumbled, Cisco Systems (CSCO) drove down the field. In the same 1996, Dell'Oro Group market survey that ranked Ascend No. 1, Cisco didn't even rate an honorable mention. The company then had a mere 1.2% share of the remote-access concentrator market. Today Cisco claims to be No. 2 or No. 3, and expects to be No. 1 shortly. Ascend disputes Cisco's method for calculating market share, but the formerly uncontested No. 1 company is in a dogfight. "The good news is that Ascend is still a dominant company in a remarkably fast-growing market. According to Dataquest, the remote-access equipment market will jump to sales of $12 billion in 2000, up from $2.7 billion in 1995. Access concentrators will make up 43% of that figure, up from 20% of the smaller market in 1995. That's a better than nine-fold increase in sales in five years. Remote-access equipment makes up about 55% of Ascend's business." <<< There is much more to the article, so you may want to check it out in its entirety. Style Pts.