To: Sector Investor who wrote (1427 ) 5/9/1998 10:02:00 AM From: Sector Investor Read Replies (1) | Respond to
Synopsis from Cowen - ASND/CORE SWITCHING BIZ LIKELY TO EXCEED OUR EXPECTATIONS../INCREASE TO STRONG BUY. ESTIMATES RAISED.The company will be one of the most significant infrastructure suppliers for the explosion in spending on next generation carrier voice and data networks. While the access concentrator and frame relay switch markets appear poised to grow 10 to 20% annually, the ATM switch market is exploding and ASND's CBX500 and GX550 products are achieving significant deployments in next generation carrier backbones. Recently, momentum is strong at ASND with the award of several large multi-year deals. Cowen raised their 1999 estimate $0.10 to $1.60 and they raised their price target to $56. [34x1999 EPS]Customers are excited about the unrivaled scalability, and management of the 550 platform. Sales of its CBX500 and GX550 platforms are bringing along significant sales of BSTDX900 frame relay switches and frame relay cards for the CBX500 platform. Cowen says that their estimate of the announced and likely wins for the core switching business suggests that there could be as much as 20%+ upside to their estimates for its core switching business this year; and progress is likely to continue unabated next year. [anybody else see ASND hitting new highs next year?] Cowen is looking for announcements from MCI and Level 3 in the near-term. They believe that ASND will be conservative in managing its deployments going forward, so that it can achieve consistent results; so Cowen says that "upside" to their estimates is more likely in the back half of 1998 and in 1999. Success with this effort will be key to continued momentum in 1999, as there will be four to five major RFPs for core switching business in the Fall of 1998. Currently, the company appears to be on-track with rebuilding its sales force. The company already has a significant deployment in France Telecom and at Deutsche Telekom for dial access. ASND believes that it has made sufficient cost improvements that there is limited risk to gross margins. the [Sahara] SA1200 platform (very similar to Yurie's LDR200) will announce in June. The product is generating significant activity and Cowen expects it to generate significant revenues this year. Cowen adds that they believe that the $15MM revenue estimate that they are carrying for the product, for 1998 is significantly under-stated. They believe that ASND will be conservative in managing its financial results in Q2, meeting or slightly beating their $328MM revenue and $0.27 EPS estimates for the second quarter. Cowen adds that they believe that the strong momentum in the core switching business is likely to lead to significant upward estimate revisions following Q2. Cowen also increased their 1999 revenue estimate by $80MM to $1.93B.
