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

To: MMW who wrote (56108)	10/20/1998 12:30:00 AM
From: Bindusagar Reddy	Read Replies (2) \| Respond to of 61433

Mike, you are correct. The SGA has matching unusual charges totaling 20.7 million. as follows 1. 5 million paid to future owner of ASND(LU) for patent infring. 2. 7 million accounts receivable write off. 3. 8.7 million write down for CAPITAL financing to some CLECS.( Not one customer as one bonehead from street.com wrote). The last item raised lot of questions from BONEHEAD ANALYSTS, who are confused about what that means. Michael Ashby explained that these customers are looking for financing from the EQUIPMENT VENDORS, apparently becoming common in the industry. Other companies may be booking them as revenue and write down at the end of the term if they default as a one time item. WHEREAS ASND is being ULTRA CONSERVATIVE in not recognizing these revenues instead are deferring until they pay the loan. On top of that they are taking a charge now,and are assuming the worst scenerio ( of the customer going bankrupt) instead of giving a sudden shock to investors at the end of the period, They want you to be PLEASANTLY SURPRISED by sudden increase in revenues next year and hence sudden increase in earnings. Mory reiterated that these are not considered BAD DEBT by any means, they will be collecting in future quarters. They are good customers, mostly CLECS. Quite interesting and ultra conservative strategy indeed. What I don't understand is why not simply leave them in other assets until they pay off, why take charge now?. I suppose they want a totally clean balance sheet with only positive surprises. I don't have any problem with it as long as they are becoming a major part of the future public network. Anyone with some accounting background throw some light on this one. I am very impressed with their REVENUE GROWTH IN a traditional weak 3rd quarter, especially in Europe. I think they will have a blow out 4 th quarter, given a conservative earnings forecast. They have deferred a lot of CORE switching revenues this quarter. I am certain they are managing the wall street and smoothing the earnings to satisfy the BONEHEADS AND CONE HEADS on wall street trying to regain the confidence. Regards, BR