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

To: Immi who wrote (41551)	3/30/1998 1:18:00 PM
From: Greg h2o	Respond to of 61433

I apologize. I am having a problem downloading the complete HQ report. If I can get the thing back up (no jokes please...my wife can vouch for me), I'll post it. greg

To: Immi who wrote (41551)	3/30/1998 1:54:00 PM
From: Greg h2o	Respond to of 61433

OK...HERE'S THE HQ REPORTAscend Communications H & Q ELECTRONIC TECHNOLOGY (ASND/Dec/$35.06) HAMBRECHT & QUIST LLC Joe Noel (415) 439-3609 Notes: a & f SPOT REPORT Reginal King (415) 439-3419 Recommendation: BUY March 25, 1998 RECAP OF OUR MORNING'S COMMENTS ON ASCEND COMMUNICATIONS Source: MarketMax * We believe the risk/reward equation relative to Ascend (ASND) has changed positively, and we are reiterating our BUY recommendation on this stock. * In our opinion the March quarter will be approximately in-line with our current estimate of $0.25 EPS on revenues of $303 million. We believe that the odds of a significant short fall are remote. * We reiterate our belief that the WAN switching business may report much stronger than expected results for the March quarter. * We are expecting ASND to announce its voice over IP product enhancements early next week, prior to the "Voice over IP" conference next week. * With ASND's strengthening market position relative to the ATM switching space, we believe it is very likely that ASND will be able see significant revenues increases over the coming quarters. Estimates Q1 Q2 Q3 Q4 FY `97 EPS ($) 0.31A 0.31A 0.20A 0.24A 1.07A `97 Revenues ($) 292.7A 311.7A 270.4A 292.5A 1,165.4A `98 EPS ($) 0.25E 0.29E 0.31E 0.34E 1.19E `98 Revenues ($) 304.0E 326.1E 347.4E 379.6E 1,357.2E Revenue Estimates in Millions 52 week Price Range: $22.00-60.00 Current Book Value: $4.88 /sh Revenue(F1996): $546.5 mil P/E FY98: 29x Cash per Share: $2.40 /sh Shares Outstanding: 198.5 mil F98Y/Y EPS growth: 11.7% 98 Price to Sales: 5.13x Market Cap: $6.96 bil Ascend Communications is a leading manufacturer of wide area networking solutions for telecommunications carriers, Internet service providers and corporate customers worldwide. Major product divisions include (1) scalable, carrier-class Frame Relay, ATM, IP and Remote Access core switching products; (2) access concentrator product; (3) Enterprise access products and (4) services and support. The following is a recapitulation of our March 25th morning's comments on Ascend Communications (ASND): We believe the risk/reward equation relative to Ascend (ASND) has changed positively, and we are reiterating our BUY recommendation on this stock. In our opinion the March quarter will be approximately in-line with our current estimate of $0.25 EPS on revenues of $303 million. We believe that the odds of a significant short fall are remote. We reiterate our belief that the WAN switching business (old Cascade business) continues to be very strong. Actually, we are expecting that reported results from this division may be much stronger than expected. We are estimating that over 50% and perhaps up to 57% of the March quarter's revenue may be derived come from this division. The growth of this business somewhat changes the composition of ASND's overall business. We believe that ASND is currently strengthening their position in the important ATM switching space at the expense of both Cisco Systems (CSCO) and Newbridge Networks (NN). We view this as quite positive because while the product's in ASND's traditional core business of access concentrators appear to be becoming commodity items, ASND's ATM business is still several years away from such status. With ASND's strengthening market position relative to this space, we believe it is very likely that ASND will be able see significant revenues increases over the coming quarters. Of course the downside of Ascend realizing 50-55% of revenues from the WAN switching side of the business is that the core ASND access server business is by definition weak. We believe it is still too early to determine the extent to which ASND's competition will affect the long term viability of this business. We are expecting ASND to announce its voice over IP product enhancements early next week, prior to the "Voice over IP" conference next week. (For full details relative to these products please see our note dated February 18, 1998). We believe that the actual direct revenue implications relative to voice over IP enhancements will be relatively negligible. However, we do believe there is a strong possibility these enhancements will assist ASND in retaining market share by allowing ASND to assist its ISP customers to offer additional products to the ISP's customer, and thus, further solidifying ASND's position in certain ISP accounts.

To: Immi who wrote (41551)	3/30/1998 2:24:00 PM
From: Greg h2o	Read Replies (1) \| Respond to of 61433

Also, COWEN raised ASND to a buy. I know this is last week's news, but this is the short report and the rationale. EPS OLD NEW Ascend Communications Buy 1997 1998E 1999E $1.06 $1.19 $1.42 We have raised our rating on ASNF to trading buy (2) from neutral (3). Our price target is $37 (26X estimated 1999 EPS). ASND's Q1 is on track, and the company's core ATM business is doing better than expected. With continued improvements in product quality and new software features on TNT shipping, business keeps getting better. We expect an acceleration in H2:98 as Europe gears up for continued telecom deregulation, Japan recovers and Latin America service providers begin to deploy ATM backbones. In addition, new product and customer announcements are likely in the near term. ASND $33 - Stix