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

To: Dennis R. Duke who wrote (1368)	4/13/1998 4:40:00 PM
From: Dennis R. Duke	Read Replies (2) \| Respond to of 1629

CIBC Oppenheimer say on target and maintains a "buy" rating post the earnings and CC and states a target of $50 within 12 months. Their report says: Our investment thesis for Ascend is in tact. And generally reiterates the CC highlights as in the other analyst reports. I have clipped a few paragraphs below. We expect the GX-550 ATM WAN switch will be a key product for international markets, especially as the company's salesforce is expanded and ramps in productivity. Due to the ongoing issues in Asia/Pacific, we expect Europe will be the main driver to the international growth through the end of 1998. We expect our positive outlook on international growth to be well balanced among PTTs, ISPs and CLECs. Margin outlook continues to improve. The company's gross margin was sequentially flat at 64.0% and was attributable to remote access equipment pricing being more stable than was expected as of a few months ago. The company's operating margin improved to 25.2% and was ahead of plan. We estimate operating margin to be stable for the remainder of 1998 in the 25% range. We include continued strong investment in R&D and sales and marketing expenses in our current estimate. Balance sheet measurements are stable. The company's DSOs were sequentially flat at 72 days. We expect DSOs to remain in the 70-75 day target range, especially as the company wisely* opts to extend payment terms selectively for some large service provider customers, as opposed to the alternative of reducing prices* which would put pressure on margins. Cash and equivalents were up about $30 million to $605 million, due at least in part due to positive operating cash flow. Inventory turns were 4.3x and were held back from further gains due to a higher than typical percentage of finished goods inventory (e.g., GX-550 demo systems). [That would be from the unrecognizied Core Switching Revenues] ------- Interesting that they picked up in the effects of delayed revenues on the balance sheet rather than the effects on forward sales. O.K. as an accountant, I find it interesting. Dennis