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

To: Clare who wrote (56177)	10/20/1998 10:26:00 AM
From: gbh	Respond to of 61433

Clare, from info spewed on CNBC, these downgrades are a combination of this loan thing, as well as concerns about achieving sales results to meet the forward PE of 30.

To: Clare who wrote (56177)	10/20/1998 10:26:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 61433

I would not count on LU doing any deal with ASND, your CEO does not want to dance and LU from what I hear is looking at other companies Regards Glenn

To: Clare who wrote (56177)	10/20/1998 10:55:00 AM
From: Jeff Call	Read Replies (1) \| Respond to of 61433

I used to work for MOT, and they do a lot of customer financing, especially in the wireless infrastructure business. A lot of revenue is also deferred until the infrastructure is built out and performs to specifications. Let me give some examples. CASH SALE: A typical sale contract (cash) would be reported as follows: CREDIT: SALES 30 CREDIT: DEFERRED REVENUE 70 DEBIT: CASH 100 As a contract is built out and certain milestones are completed (such as first wireless call completed, etc.), an entry is made to move dollars from Deferred Revenue to Sales as follows: CREDIT: SALES 70 DEBIT: DEFERRED REVEUNE 70 CREDIT SALE A typical Motorola sale contract (financing) would be as follows: CREDIT: SALES 30 CREDIT: DEFERRED REVENUE 70 DEBIT: NOTE RECEIVABLE 100 However, if the debt repayment were in question, the note would automatically be moved to bad debt in order to be conservative on the books, as follows: CREDIT: ALLOWANCE FOR BAD DEBT 100 DEBIT: BAD DEBT EXPENSE 100 Note, there could still be a very good chance that the dollars can be collected, however, to be conservative it should be written off (or an allowance account set up) in the period the debt recovery comes into question. If the debt is never recovered this entry is made: CREDIT: NOTE RECEIVABLE 100 DEBIT: ALLOWANCE FOR BAD DEBT 100 If the debt is collected in the future, the following is done: CREDIT: BAD DEBT EXPENSE 100 CREDIT: NOTE RECEIVABLE 100 DEBIT: CASH 100 DEBIT: ALLOWANCE FOR BAD DEBT 100 What Ascend did for their financing is ULTRA CONSERVATIVE and conforms to GAAP. I would have absolutely no question "AS TO THE QUALITY OF THE EARNINGS" either in the current period or future period based upon how they treated this financing contract. I also tried to give an example of what deferred revenue means. BTW I am a non-practicing CPA. Any analyst who would downgrade ASND based upon how they handled this financing (and I believe ASND indicated that financing is involved in less than 5% of their contracts) is a complete idiot.