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

To: Dennis R. Duke who wrote (43452)	4/9/1998 6:59:00 PM
From: Dennis R. Duke	Respond to of 61433

From 10 pages of notes I will try to give a summary of the CC: Mory opened with a summary of the sales results: Sales of $305.1 vs $292.5 with sequently growth of 4.3% over the prior Quarter. Net Income of $52.4 or 26 cents vs. $47.6 or 24 cents when compared to last Q. Book to bill is slightly over 1. Expansion of Public networks and the internet is great. Current networks not sufficient for needs. CLEC's are the agents for change and providing service at lower costs. Referenced recent successes at Williams, Quest and one other I did not get. CLEC's are pushing the RBOC's capital expenditures. Good international growth and prospects in France, Germany and Holland. North America had the greatest sales growth followed up Europe being primarily the countries noted above. Asia Pacific still sees softness, with Japan moving more quickly than the rest of the region. International will grow faster in the future. Will win over competition with bigger competitors by focusing on public networks and better functioning services. Access Switching Q1 strong with approximately 8% growth, Primarily the MAX TNT product. UUNet, DT, FT, Unisource, and NTT major customers. CLEC's are early adopters of their technology. Market share leader when measured by access ports at 41% in Q4 according to Dell Oro. Mory believes that posts is the correct metric for market share. While others will make claims based on using different metrics. MAX6000 is needed by the enterprise customer and is unmatched by any of our competitors. Our solutions for Voice and FAX over IP are shipped and in use at customer sites today. V.90 interoperational testing is ongoing. Beta release in April and general availability in May. Good growth in this sector going forward. Core Systems Revenuew up slightly (which confirms they did not get the numbers with GX550 sales). Europe and Asia had good growth in sales. GX550 had zero revenue taken in the Q1, and will be a major contributor going forward. Sales in this area are system sales with Frame Relay, ATM and Navis being combined in their client base. ASND strong points are innovation and time to market, which will serve it will in the future. Q2 Focus We will continue to work on infrastructure including: People Product and Expansion in the international market Our strategy is sound and continuing to build momentum going forward. End of Mory's comments I will pick-up with Michael's and Q&A in the next two segments. Dennis

To: Dennis R. Duke who wrote (43452)	4/9/1998 7:47:00 PM
From: Dennis R. Duke	Read Replies (3) \| Respond to of 61433

Michael Ashby at the Q1 CC: Let me give you the details of the Q1 revenues. $305m or 4.3% over the prior Q with the following breakdown: Sales in Growth rate Q1 Over Q4 Access Concentrators 44.2% 8.7 or 7.8% (its one of those) Core Switching 41.1% 1.1% (see GX550 not here!!!) Enterprise 9.9% 7.6% Services 4.8% -4.?% North American Sales 74.2% You can test your math skills International Sales 25.3% 0.8% Access Concentrators Ascend was on PLAN with NO SURPRISES and that was GOOD NEWS. ISP demand was strong accross the board. As PLANNED MAX6000 sales were a small amount of the Q1 revenues. Core Switching Strong demand with momentum increasing for the GX550. Some of the GX550 are shipped, but no sales have been recognized. GRF down slightly in the quarter, with broadband (Shara, etc.) products up in the quarter. Asia Pacific expected to be stronger in the 2nd half of the year. Japan's results were improved by one customer contract. Gross Margin At 64% of sales gross margin was the same as the prior quarter. That was better than expected due to price effects. (Apparently the market did not require the lower cost per port that was discussed back in October/November. And the company had taken steps to improve cost of sales buying that was mentioned in the Monty and BARS conferences.) R&D At 13.4% it was slightly less than planned due to late hiring. The people have been hired and the expenditure will grow next quarter. An India facility was also brought up this quarter. Sales and Marketing At 22.1% of sales it was down from 22.8% of sale sin the prior quarter which is according to our PLAN to reduce these costs. (I think the goal was 20%, and expected to be in that range by year end, according to PLAN). General and Admin 3.3% and expecting to bring it down to 3.0% of sales by year-end. Operating Income is the Best of Class in the category. (I guess he was trying to say that ASND is the most profitable in the NWX sector). .26 cents versus last quarter of .24 cents and 1 cent above the First Call estimate. Balance Sheet and other items Cash is up from $571 to $671 mainly due to operations and the exercise of stock options. DSO at 72 days, same as last quarter. PLANing on 70 to 75 days going forward. They would rather give terms than discounts. (Hey, they have the cash, so keep the margins is a good PLAN). Inventory turns at 4.3 and expected to continue to improve in the next quarter. Headcount at the end of the quarter was 1,969 up some 127 people (full time equivalents) with turnover at expected levels. Forward Guidance PLANing sales of $1.4 billion and full year EPS of $1.15 with comfort. No change in guidance for the street estimates. [see what I mean about the word PLAN, in creating a mind set that they have the tiger by the tail] Q&A is next, Dennis

To: Dennis R. Duke who wrote (43452)	4/9/1998 8:41:00 PM
From: Dennis R. Duke	Read Replies (3) \| Respond to of 61433

Q&A Session from the CC: The names here are going to be best guess. All of this is paraphased unless quotes appear. Sanford Berstein - When will the next generation of TNT be announced and Ship? What market effects do you expect? Number or percentage of ports that are VoIP versus data? Mory - late this year on TNT. No market negative price effect of new product. Bernie - we don't forecast by type of port. Chris Stix, Cowen - Will the ATM exceed forecast? Become a majority of sales? Mory - CBX550 could be both Frame Relay and ATM and high speed router, so ATM specifically not forecastable. Michael - Core Switching will cross over in the 2nd half of 1998 and will be strong in Q2. Everen - Is the recently announced GTE business a new system for them? Bernie - Yes it is and the order announced is not the whole system. It will be joined with their other operations. DMG - Frame Relay on the 9000 and the CBX? Comment on RFP activity and geographic regions? Mory - RFP activity is Latin America, Europe with ATM and some Frame Relay, and Far East mainly ATM. Eric ? - Price stability against bigger competitors and port expansion of LU/Livingston and NT/Aptos? Mory - No price list changes expected. Will discount to large clients. as to competition, we competed against NT when they worked with Shiva, and Livingston has always competed with us. So this sense to be a continuing issue. Their margin expectations with the bigger players are not different then they were before, so again a non issue. Matt ? - Remote Access in foreign sales force and ASND/CSCC intergration how is that going? Mory - "We are working as one company at this point". Joe Bellace, Merrill Lynch - Provide some color on the Book to Bill, both North America and Europe and the Japanese revenues? Michael - Book to bill both around 1 for North America and Europe. Japan was about 10% of sales in Q1 with one major customer accounting for the increase. Udoll Capital - Product Revenue summary again. numbers were repeated. Mory - ATM over SONET is where the backbone carriers are moving to as opposed to packets. GRF not adding density, does have OC-48, and adding features to address customer desires. H&Q - We have heard that Japanese orders were pushed out or cancelled from your backlog? Mory - we don't count orders without a ship date in our backlog or our book to bill. The demand is strong for our products and the Japanese orders we have are solid. UBS securities - Name the customers over 10%of sales in this Quarter? Michael - only one customer was over 10% of sales (would not name). Bernie - Frame Relay and ATM volume of orders up. CICB Oppeiheimer - 1) Order or Sales 2) Price stability 30 European seasonal softness Bernie - Pricing has been better than expected. We watch the market and we did not need to make the type of reductions that we thought we might have last October ot November. There is strong market action for our products. We have accounted for European softness in our planning. Nations Bank Monty - Europe as a % of Sales this Q? Revenue from Williams? GTE shipments? Michael - Europe just over 10% of sales. Bernie - ZERO revenue from Williams or any of the GX550 devices. GTE will ship later in the year. UBS Securities - TNT share of sales within the Q? Shara and and other broadband products sales? Bernie - TNT the majority of Access Revenues. Shara was up Q over Q. Thompson Keragan - Bidding against Cisco and NN on major RBOCs? Mory - CSCO has one alliance with a RBOC. GTE has chosen several of ASND products because they were the better solution. We don't want alliances, we do want to provide solutions to customers problems that addresses their needs. We have the best products and GTE, DT, FT, NTT and others are buying because they know it. The GX550 will move into the terabit speeds in the future, but no announcement date now. Bernie - our major customers know our product developement plans, and they know we have what they want. Next Question same person - Will you be doing any DWDM (Ciena type) products? Mory - we are looking into that now. Raymons James - International sales an increasing % of sales? Michael - Should be higher due to implementation of CSCC products into the world wide joint sales organization. [CSCC only marketed to U.S.] Formerly ASND by itself had about 50% international sales. We expect 30% by year end and 40% in the future of foreign sales. [huh, growth] Bear Sterns - MAX6000 going to marketed differently, directly to enterprise or to service provides than to customers? Mory - To our service provider and than to customers. No change in strategy. That is the end of my reporting on the CC. I look forward to the market's reaction. The replay is available at 1-800-475-6701 access number 386224. Thank you for "playing what my stock" Dennis