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

To: w2j2 who wrote (1414)	4/30/1998 6:01:00 AM
From: Thomas M.	Respond to of 1629

HAMBRECHT & QUIST CONFERENCE SUMMARY (courtesy of Dennis R. Duke) Other Presenters Comments NN said that QoS is an important part of ATM's future success, but another key is the multi-function cost reductions of having many things in one switch. VoIP, FR and ATM within a box can save 68% of the capital equipment cost and 22% of operational costs. Less boxes, less energy. NN also said their switches were big enough to handle all the phone traffic of the UK in one switch. Now who know if that is some optimum switch environment, but it created an impression. I assume that both of these points could be made about ASND's Core Switching products. AFCI while not directly competing with ASND is in a nearby business, was very bullish. Visibility is getting better. Growth going up. And this could mean this whole area is getting a boost. While it was written that Mory spoke for only 8 minutes, that was the format that Joe Noel of H&Q asked for on his companies. AFCI did the same format, yet interestingly they were not written up as hiding from the media, or carrying a small stick. And AFCI was not taking any floor questions either. So in my opinion the author of that remark has a personal agenda. Mory's Presentation There were 20 slides presented by Mory in his 8 minute presentation. Many were new. My request, or hope, for a Recent Wins summary was on slide 13. Listed were Williams, GTE Switching, LCI, XCOM/Level-3 (It was mentioned in the breakout session that this is not final, and it is possible that Fore could get this contract due to cheaper price on a lower product bid), AT&T, PSINet, QWEST and NTT Packet. I will not go into slide details here. But it was a general summary of the business as we know it from the CC and analyst reports. I have a copy of the overheads, if there are any questions. Joe Noel's Q&A Period The questions were from H&Q's Joe Noel and the answers were all Mory's: Q: Where is ASND visa NN and other competitors? A: Our Core Switching products, ATM, SONET, etc., are ahead of our competitors. Q: What is happening with QWEST and others? A: These customers are moving to ATM management over fiber. The cross connects are all moving over the long term to an ATM enviroment. Q: Same issue in CLEC's versus RBOC's: A: Yes, both long term will be moving towards ATM. Q: Will the Accesss business continue growth as in Q1? A: In Q1 we had 8% growth in Access products and expect to see the same going forward. Content providers are using more ports, which is fueling demand. Ascend's market shares is growing through GTE, WCOM and PSINet as examples. Q: How is the competitive environment, i.e., where is Ascend compared to Cisco? A: I am very bullish. Ascend is well ahead of Cisco. We are not seeing Cisco Stratcom in many of our accounts. Q: How is international growth, specifically Europe, and are there any issues regarding the MAXTNT products? A: Maintaining low double digit growth in Europe (this QoQ, which is higher when compounded). No MAXTNT issues. Q: What is the environment in the internet access in Europe? A: The average connect time has raise from 5 minutes to between 15 and 20 minutes. Q: Give us an idea of the expected growth of Japan in the second half of 1998, and state of the Japanesse market? A: Q1 10% of sales came from one customer from ATM switching products (guess we just found out who the other 10% customer is). Interestly in Q2 we expect the same percentage revenues to come from Japan, but it will be in Access products from customers adding to internet ports to expand their networks. Further, the expected recovery of the Japanesse economy should allow for greater growth in the second half of the year. Q: What is happening in VoIP? A: We are in the first phase of VoIP for long distance. This area has great promise with the average price per minute as low as 6 cents. Whihc considerably cheaper than current systems. Q: Is ATM the preferred backbone migration for RBOC and new carriers versus ATM SONET/Packet over SONET? (I admit my notes are weak here.) A: ATM is Quality of Service that is needed to assure customers needs are met. Q: Where are you seeing strenght and RFP coming from? A: RFPs are coming from all over the world. Global, FT, DT and others are looking for ATM RFP responses. As is Italy. RFPs are new business and we have to earn that business (you see a mix of confidence with these caution statements). Q: What is happening with port density, is 3COM leading? A: 96 ports and less LU's Livingston and USR are present and we are competing well. High end not real competitors. We are seeing Cisco in the enterprise space. Q: How has Livingston's purchase by Lucent changed the competitive environment? A: It has not changed. They are behaving very much the same and we are still picking up business. Q: Can you give us and increase in your forward guidance for the Q and the Year? A: We are comfortable with the current guidance (This is being consevative IMHO, and is a reaction to Q3. They are not going to raise until they have to. This also probably cost us today's high, but that is more likely to benefit us in the long run.). Q: You are not going to give us any upward guidance with all this good ATM news? A: ATM deals are delivered over several quarters and can take time to deliver. We are not raising out guidance at this time. (Could have been the nail, saying it twice.)

To: w2j2 who wrote (1414)	4/30/1998 6:04:00 AM
From: Thomas M.	Read Replies (1) \| Respond to of 1629

HAMBRECHT & QUIST CONFERENCE (continued) (courtesy of Dennis R. Duke) Breakout Session Q: What is happening in WDM? Fill us in more A: Ascend will announce more plans during SuperComm, including delaings with Ciena (what and when is SuperComm?) Q: Why do carriers want ATM over SONET? A: Quality of Service. Q: Why SONET? A: Bandwidth efficency There was some discussion of the 500, the 550, GRF's, IP Navigator, MPLS standard and frankly I did not hear what was about. Q: Explain your to be announced VPN strategy? A: We will announce at IPCOM (The upcoming conference) our VPN strategy. Which will include VPN, PVC and working with carriers to provide service. Q: When will we see OC-48? A: Sometime later this year. Q: What is Lucent planning with Yurie? A: We can't figure out what they will do with Yurie. We can't figure out why they bought it. Michael added it sure give this industry a greater value. Q: Please provide some numbers about international sales breakout and reconcile to growth rate for the company? A: Michael reported that 32% of 98 sales and 40% of 99 should come from international business. Given the last Q was 27%, you can calculate the growth rate and it will be faster than the U.S. growth rate. (When pressed on the reconcilation to estimate they quickly put the calculation responsibility on the audience. More on this topic later.) Q: What is grow faster Access or Core Switching? A: (You know this from the CC.) Michael reported that Core Switching will pass Access before year end and will be over 50% of 98 revenue. Q: Japan A: Flat Q1 to Q2 (Remember it was expected in the CC that Japan would be 5% as I recall. Here again this is an upside surprise, so not giving pward guidance is preceived as negative. I just think they are being conservative.) Q: In the session downstairs you indicated RFPs were strong in Europe. What about the rest of the world? A: We are seeing RFPs from all over the world, Latin American, Asia and Europe. Q: Are the RFPs focusing on only ATM? A: No, we are more and more offering system solutions with FR, and other componets. Q: Status and growth of DSLTNT? A: We saw good growth last Q. We are in the uptake of DSL technology to CLEC and many backbone Carriers, and have many trials currently underway. Alcatel is pressuring prices in this area, and ADSL is winning as a platform versus SDSL. Q: Are the Core Switching oppotunities Williams sized deals? A: We are seeing a lot of RFPs in the $10 and $25 million ranges, but it must be remembered that we delivery many of these contracts over many quarters. Q: Tell us more about the international expansion and what currency effects that might have? A: Michael reported that ASND does not deal in foreign currency and all products going abroad are shipped from U.S. in U.S. Dollars. Thus Ascend does not bear any currency risk. There was more discussion about growth rates accelerating in international for the remainder of the year. Also China is the number 2 foreign subsidiary now. We are looking for a rebound in Asia in second half. Q: Wat are you forcasting for growth rates? A: Michael, Remote Access 10 to 20%, Core Switching 20 to 30%. (Estimate sounds low.) Q: Port Pricing issue? A: Seems to be stabilized. Q: Comment on the win ratio? A: I am very Bullish. We have won on Qwest agaisnt Cisco, LCI agaisnt NN, etc. We do not see Cisco/Stratacom much. Nortel is getting a little stronger. Bidding on Level III could go either to Ascend or Fore. Fore's low cost could give them a shot. Q: A question about bank financing of business needs A: Mory said we have $600,000,000, on the Balance Sheet. Michael discussed the leasing company. It is on Balance Sheet, but revenue is not recognizied until delivered and paid for. It is carriered as Deferred Income. To be competitive the company is willing to give terms over gross margin reductions.