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

To: Dennis R. Duke who wrote (49604)	7/10/1998 1:24:00 AM
From: djane	Respond to of 61433

Ascend Comes Out On Top After Cascade Acquisition techweb.com July 06, 1998, Issue: 797 Section: Internetworking Ascend Comes Out On Top After Cascade Acquisition Edward F. Moltzen New York -- It appears that Ascend Communication Corp.'s once-questioned acquisition of Cascade Communications Inc. was a smart thing to do. Slightly more than a year after closing the deal, Ascend's revenue has grown 121 percent, it has cracked the prestigious Standard & Poors 500 list and could potentially be the subject of a takeover attempt by Swedish giant Telefonaktiebolaget LM Ericsson Stockholm, observers said. "I think they have done a great job of integrating, and they still have more to do," said Tom Burnett, an analyst with Merger Insight, New York. "But they have this problem of always being in the rumor mill." In June 1997, Alameda, Calif.-based Ascend paid more than $3 billion for Cascade, a dollar amount rivaling the price IBM Corp. shelled out for Lotus Development Corp. After a bumpy ride on Wall Street, which saw Ascend's stock valuation cut in half at one point, the share price today is back to the same area it was when the Cascade deal was announced. Although rumors of Ericsson's possible interest in Ascend remain shadowy and unsubstantiated, it is certain that Ascend looks particularly attractive following the proposed merger between Northern Telecom Ltd. and Bay Networks Inc., said Burnett. With a share price that began last week at $49 per share, Ascend is carrying a market capitalization of $9.4 billion, slightly more than Nortel said it would pay for Bay Networks. On June 19, Ascend's stock closed at $48.69. "Ascend is really in the driver's seat now," said Paul Sagawa, an analyst with Sanford C. Bernstein Inc., New York. "There's only one Ascend, and there are about four or five companies out there that want to buy it." Although some Wall Street executives predict that Ericsson will acquire Ascend, others expect the developer of technology and equipment for telecommunications carriers, Internet service providers and corporations to wait for another suitor-namely, Lucent Technologies Inc., Murray Hill, N.J. That would not likely be until Oct. 1 when Lucent, which was spun off from AT&T Corp. 18 months ago, would be permitted under terms of that deal to take part in a stock transaction, said Sagawa. "But I don't think Ascend is looking to shop itself around," he added. Following the Cascade acquisition, Ascend faced some integration issues and also needed to replace some sales staff. The combined company ultimately has handled those issues successfully, said Sagawa. During the first quarter, ended March 31, the combined Ascend-Cascade company reached $305-million in sales and a profit of $52.4 million, or 26 cents per share on a diluted basis, compared with $292 million in sales and a loss of $163 million for the year-ago quarter. Much of that growth occurred in North America, especially through sales of the company's access ports, said Mory Ejabat, president and chief executive of Ascend. The company expects sales of these products to continue growing, he said. Quarter-over-quarter sales in Europe and Asia-Pacific also grew, Ejabat said. Copyright r 1998 CMP Media Inc.