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

To: Jeff Jordan who wrote (43589)	4/10/1998 9:53:00 AM
From: Narotham Reddy	Read Replies (1) \| Respond to of 61433

This Dow Jones news expects some sell off Monday Dow Jones Newswires -- April 9, 1998 Ascend 1Q Shows Business Rebounding; 2Q Seen Brighter By MARK BOSLET Dow Jones Newswires PALO ALTO -- Ascend Communications Inc. (ASND) met Wall Street's growth expectations with a first quarter that showed its business has rebounded solidly from last year's slump. The Alameda, Calif., networking equipment maker also indicated on a conference call with analysts that the second quarter would see accelerating revenue growth. But market observers said Ascend's shares were unlikely to trade higher when the markets reopen Monday. The stock has already chalked up a strong gain in recent months, rising from the mid-20s in November to a 39 7/8 close Thursday. In addition, several analysts had set high expectations for the quarter by claiming the company's performance would be strong enough to push second-quarter targets up. That won't be the case. "What the company proved on the conference call is that business is sound," said Joseph Noel, an analyst at Hambrecht & Quist. But profit taking should hit the stock Monday as second-quarter earnings estimates remain unchanged, Noel said. Still, Ascend's continued climb from last year's dumps, when software problems caused product malfunctions and the merger with Cascade Communications Corp. sapped management resources, proved an important step. The company is now a more formidable competitor to market leader Cisco Systems Inc. (CSCO) in the communications carrier and Internet service provider markets, experts said. For its first quarter, Ascend reported earnings of 26 cents a share, a penny above expectations, and a substantial improvement from last year's loss of 88 cents a share. Revenue of $305.1 million met Wall Street's target and showed a 4.3% increase from the fourth quarter and 4.2% rise from $292.7 million in last year's first quarter. On the conference call, the company said it expected revenue in the second-quarter to growth faster than in the first quarter, and that earnings would be 27 cents a share. Wall Street's consensus estimate for the second quarter is 27 cents. Market sources, however, described the call as positive. Ascend's ATM products from Cascade have had increasing business with large carriers and improved sales in Europe and overseas, where Cascade had little presence prior to the Ascend merger. Network access products, including the company's high-performance MAX TNT, also had a strong performance, particularly in North America. The company is expected to introduce a new ATM, or asynchronous transfer mode, switch called the GTX 550. The only negative was that the company said it expected its gross margin to move downward over the course of the year, market sources said. Ascend officials didn't return a call seeking comment.