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

To: Jan Crawley who wrote (44451)	4/15/1998 2:22:00 PM
From: gbh	Read Replies (2) \| Respond to of 61433

Jan, were these May 40 or 45 calls and puts?

To: Jan Crawley who wrote (44451)	4/15/1998 2:53:00 PM
From: Greg h2o	Respond to of 61433

H&Q COMMENTS: Ascend Communications H Q & ELECTRONIC TECHNOLOGY (ASND/Dec/$39.81) HAMBRECHT & QUIST LLC Joe Noel (415) 439-3609 Notes: a & f SPOT REPORT Reginal King (415) 439-3419 Recommendation: BUY April 14, 1998 ASCEND REPORTS UPSIDE MARCH QUARTER Source: MarketMax 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. Estimate Q1 Q2 Q3 Q4 FY `98 Rev-new 305.1A 327.3E 348.6E 380.9E 1362.0E `98 Rev-old 304.0E 326.1E 347.4E 379.6E 1357.2E `98 EPS-new 0.26A 0.29E 0.31E 0.33E 1.19E `98 EPS-old 0.25E 0.29E 0.31E 0.34E 1.19E `99 Rev-new 388.9E 415.0E 437.0E 468.9E 1709.8E `99 Rev-old NE NE NE NE NE `99 EPS-new 0.34E 0.36E 0.37E 0.40E 1.47E `99 EPS-old NE NE NE NE NE Revenue Estimates in $ Millions Notes: Additional companies mentioned in this report: a)Hambrecht & Quist LLC maintains a market in these stocks. e)The analysts covering these stocks have investment position. f) Options are available on these issues. Operating Results: Thursday after the close, Ascend Communications (ASND) reported an upside March quarter of $0.26 EPS on $305.1M in revenue versus our estimate of $0.25 EPS on $304.0M in revenue and the Street's consensus of $0.25 EPS. Future Estimates: Our new June quarter and year-end `98 estimates of $0.29 on $327.3M and $1.19 on $1.36B, respectively, remain virtually unchanged. We are initiating 1999 estimates of $1.47 on $1.71B. in revenue. Business: Overall, the Company's revenue, expense growth and margins were approximately in-line with our expectations. While we believe that stringent expense controls helped propel the quarter's upside results, it appears that ASND's revenue and order growth was broadly based across all product lines. The balance sheet continues to improve with cash increasing approximately 24% sequentially and DSO's remaining flat versus the December quarter. The Access Concentrator business showed much more strength than we had originally anticipated growing 8% sequentially, while the Core Switching, the Enterprise Access and the Service businesses grew 1%, 6% and -7%, respectively. Geographically, International business remains weak with North American revenue growing 6% versus International's still somewhat anemic 1% growth. The book-to-bill remained above one and the backlog in Core Switching appears strong due to new contracts. Although March's results excluded about $5-7 million in GX 550 revenue, we believe that the Company may announce new competitive wins over the coming quarter. We believe that ASND's recently introduced new VoIP products, new MAX 6000 platform and ATM switches may offer increasing opportunities for continued revenue and earnings acceleration throughout 1998. Recommendation: We further believe that, ASND remains attractive based on its fundamentals, and we would accumulate the stock on weakness. Currently trading at only 27X our `99 EPS, we reiterate our BUY recommendation for Ascend Communications (ASND).