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

To: JR who wrote (40898)	3/25/1998 12:09:00 AM
From: Jack Colton	Read Replies (1) \| Respond to of 61433

But COMS has more problems than the street will tolerate (IMO). They will not have an easy path for a turn around because of several factors. I've heard they need to save 12% of their employee base. But rather than repeat what I hear or read on other sources, let me share my own opinions. Their product mix and marketing style are proving to be incompatible with long term profitable operations. I had the option of becoming certified with 3COM, but I chose not to. I disagreed with their business model for their partners. What they called qualified "Integrators," (there were 6 other 3COM resellers in my area) I thought were nothing more than glorified box peddlers. The firms that resell 3COM would compete on price, until their operating margin was down in the dirt. I can not afford to operate like that. It costs me approximately $50,000 in continuing education per technical "network engineer" per year to keep them up to date and fully qualified on 3 to 4 different products. Most other integrators do not appear to work that education cost into their business models, and from what I hear, the customers suffer. We pick up most of our customers from our Manufacturer partners, who bring us into an account to help save or repair a deal that some other reseller has messed up. We correct whatever design or configuration problems existed, prove to the customer that the equipment really does work, and build a lasting relationship. I do not think COMS works like that. The resellers that have top level certification with 3COM will generally try to switch a Bay or Ascend deal to 3COM rather than fix the design / configuration problems - after all, they can usually propose a 3COM solution that is cheaper on the front end. They will discount the 3COM equipment to less than a 5% margin - which is good for the customer, but the integrator cannot then supply properly trained personnel to help configure the equipment. There are six large 3COM "shops" that I am well connected with, and all of them are in some stage of entirely upgrading their networks to non 3COM solutions. These six represent at least a $5,000,000 opportunity for me. Jack