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

To: H. Wai who wrote (1360)	4/9/1998 10:21:00 PM
From: Immi	Read Replies (1) \| Respond to of 1629

(Adds details in 11th to 13th paragraphs.) Alameda, California, April 9 (Bloomberg) -- Ascend Communications Inc. reported earnings slightly higher than analysts' expectations as the networking company sold more of its large switches to phone companies and Internet service providers. Ascend said net income for the quarter ending March 31 was $52.4 million, or 26 cents a diluted share, compared to a loss of $163.2 million, or 88 cents, in the year-earlier period. The company was expected to earn 25 cents, based on a survey of analysts by IBES International Inc. The numbers are adjusted to include results for Cascade Communications Corp., which Ascend bought in June for $2.8 billion in stock. Switch sales continued to grow as telecom service providers expand their networks to handle more Internet traffic. Revenue from Ascend's remote access concentrators, which route incoming Internet calls, also rose from the previous quarter, reversing a six-month trend. That means Ascend is holding its own so far against larger rivals Cisco Systems Inc. and 3Com Corp. ''They delivered on both sides of the business'' this quarter, said Nikos Theodosopoulos, an analyst with UBS Securities who rates the stock a ''hold.'' Ascend won several high-profile contracts during the quarter, including one with British Telecom Plc. Today Ascend said the networking unit of GTE Corp. would use its equipment to expand its network for voice and data traffic. Cisco and 3Com were both bidding for the GTE account, Ascend officials said. Revenue Up 4.2% Revenue for the latest quarter was $305.1 million, up 4.2 percent from $292.7 million a year ago. Access equipment sold to the telecom market made up 44 percent of the total, and core switches represented 41 percent. ''They've made huge strides in the core switch market,'' said Joe Noel, an analyst with Hambrecht & Quist who rates the stock ''buy.'' The company said its Japanese business, which accounts for about 10 percent of its revenue, rose slightly from the previous quarter. That was a pleasant surprise, given the economic turmoil in the region. Ascend Chief Financial Officer Michael Ashby cautioned, though, that the uptick was due to one large contract and may not last. ''We may not see Japan turn around for several more quarters,'' Ashby told analysts in a conference call. Ascend's operating margin -- its operating income as a percentage of sales -- rose several percentage points to 25.2 percent, sooner than the company had predicted. Gross margin -- the percentage of revenue that remains after deducting product costs -- was 64 percent, in line with previous company guidance. The margin figures may indicate that prices for remote access gear, which were cut by as much as 50 percent on some products last year, may be firming. ''These numbers are very encouraging,'' said Eric Blachno, an analyst at Bear, Stearns & Co. who rates Ascend ''neutral.'' Blachno said it is unclear if Ascend's higher remote access revenue means it is taking market share back from Cisco and 3Com or the entire market is growing. The market for remote access concentrators reached $1.79 billion in 1997, according to the market research firm Dell'Oro Group. Ascend shares fell 13/16 to 39 7/8 in trading of 10.6 million. The company released its results after the close of regular U.S. trading. --John Shinal in the San Francisco newsroom (415) 912-2995/pkc/smw