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

To: gbh who wrote (47860)	6/2/1998 9:20:00 AM
From: Duke	Read Replies (1) \| Respond to of 61433

Bid 42. I expect Tech stocks rebound today. It's last chance for those waiting to get in at low 40's.

To: gbh who wrote (47860)	6/2/1998 9:32:00 AM
From: Dennis R. Duke	Respond to of 61433

Also posted to the News Only Thread: Message 4683599 Later, Dennis

To: gbh who wrote (47860)	6/2/1998 9:47:00 AM
From: gbh	Respond to of 61433

Newbridge article from TSC (with ASND references) Top Stories: Newbridge Seen Meeting Expectations but Some Investors Don't Care By Kevin Petrie Staff Reporter 6/2/98 9:11 AM ET The fourth time holds little charm. After warning Wall Street three quarters in a row, Newbridge Networks (NN:NYSE) likely will meet investors' expectations when it reports profits for the fourth fiscal quarter ended April 30 after the market closes today. The catch is that expectations have sobered, and, after a 40% stock rise in the past four months, some investors are not holding their breath for more immediate gains. Listeners to the conference call will search for clues about the health of Newbridge's new 36170 products, which act as major arteries in networks managed by phone carriers. They also want to hear that sales of an older line bounced back after shrinking severely in the fiscal third quarter. Another question is whether Newbridge and its partner Siemens are on track to succeed with their high-capacity 36190 switch starting in late 1998. A First Call consensus estimate predicts earnings of 13 cents per share for the fourth fiscal quarter, up a penny from the consensus estimate a month ago, according to the Baseline data service. That compares with net income of 28 cents a year ago and 7 cents in the prior period. After confirming its preannounced numbers in February for its third fiscal quarter, Newbridge emitted a consistent message for its fourth fiscal quarter. But one old Newbridge bull has taken profits. Money manager Pierre Bernard at T. A. L. Investment Counsel unloaded much of his Newbridge stake after the stock rose to 32 in early May from 22 in early February. The 150,000 Newbridge shares formed 4% of his New Economy fund. Bernard doesn't expect Newbridge to boost its stock much by making the number. Meanwhile Bernard is holding on to Ascend (ASND:Nasdaq), a direct rival of Newbridge in the phone-carrier business. Ascend has climbed about 75% this year, and, at 7 times sales, it is more richly valued than Newbridge (with a price-to-sales ratio of 4). But Bernard is more optimistic about the popularity of Ascend's frame relay and asynchronous transfer mode, or ATM, products for phone carriers. ATM products pump data through the heart of networks. Indeed, heightened competition from Ascend and the dominant networker Cisco (CSCO:Nasdaq) has damaged Newbridge's reputation somewhat. "The interest [in Newbridge] on the Street is not as high as it was three months ago," says Bernard. "For sure, Newbridge is not a Cisco." Newbridge slipped 7/8 to 27 1/2 Monday, losing some of the gains it realized on Friday after analyst Paul Silverstein with BancAmerica Robertson Stephens started the stock at a buy. Silverstein set an estimate of 14 cents for the most recent quarter and says Newbridge will succeed in supplying phone carriers, growing sales of one product line and resuscitating an older one. He also says Newbridge has stopped the losses from its acquired UB Networks. Silverstein's firm has no underwriting history with Newbridge. One longtime shareholder who asked not to be named wants Newbridge to grow revenue from $359 million the third fiscal quarter, boost gross margins from 59.6% and stick to its promise of keeping expenses low. "That's the track they put themselves on a few quarters ago," says the manager, who has traded shares while keeping his core holding intact. Overall his firm is in the black with Newbridge. Sales of Newbridge's old time division multiplexing, or TDM, products for phone carriers eroded rapidly in the third fiscal quarter, generating 36% of total revenue, down from 44% in the second fiscal quarter. Phone carriers instead were purchasing new ATM boxes. Newbridge stock soared last spring and summer as optimism built that Newbridge's 36170 frame relay/ATM switch was winning big business with carriers. The 36170 comprised 34% of revenue in the third fiscal quarter, up from 24% in the second fiscal quarter. Silverstein estimates 36170 sales will grow 18% this quarter from the prior period. In the third fiscal quarter, 36170 sales slowed to 12%; Silverstein blames that decline on management distractions, but now sees revenue accelerating. "It's the analogy of a river and stream. The river is still to come," Silverstein says. Down the road, Newbridge also can capitalize on the 36190, a monstrous switch that Newbridge and its ally Siemens had previously intended to deliver one year ago. Units are in beta-testing, and Siemens likely will ship full commercial volumes by the fall. Although it will add only incremental revenue to Newbridge's top line, the 36190 will strengthen the company's broader product portfolio. The 36190 is able to ship one terabit, or one trillion bits of data, per second, a capacity 80 times greater than the 36170. Carriers would attach multiple 36170 units to a central 36190 in a hub-and-spoke fashion.