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

To: The Phoenix who wrote (59576)	1/27/1999 1:28:00 PM
From: Bindusagar Reddy	Read Replies (1) \| Respond to of 61433

I hope so, Gary, keeping high margins is good for everyone. Don't kil the goose. AS to the net sales. These are the orders placed mostly by salesman after they lhave worked the deals. It's not individual consumers placing order, especially they are orders. Telcos don't place orders on the web without salesman involved. Biggest reason for their good margin is 80% gross margin high end routers and high end switches. My Q is if LU drops these to 50% range what will happen to CSCO?. We hope that won't happen for everyone's benefit. Good luck, Gary. If I were you I would be in both LU and CSCO unless you are CSCO employee who doesn't want to own LU. I sold deep in the money PUTS on CSCO with minimal risk. I will lose if CSCO drops below 75 otherwise I get to keep the premium. Regards, BR

To: The Phoenix who wrote (59576)	1/27/1999 2:42:00 PM
From: Mr.Fun	Read Replies (1) \| Respond to of 61433

In the interest of fairness, let me jump in here to defend Gary. Cisco's sales to Sprint (xDSL) and GTE (a whole bunch of stuff) are considerable wins. I certainly have been critical of Cisco's relative paucity of recent carrier contract wins vs. the expectations of the investment world, but here is a good start. GTE in particular should be of at least minor concern to Ascend share holders. While this does not threaten Ascend's ATM business at GTE, it does cut off some growth opportunity for the rather large installed base of TNTs at GTE internetworking. As I read it, some AS5300's will be installed for Voice and Fax over IP - although apparently not for phone-to-phone IP calling. As GTE is the 3rd or 4th largest internet carrier in the US (depending on whether you count C&W which seems to be doing everything it can to screw up the MCI business it bought), it is a ball dropped for ASND. Sprint is also a nice win although LU/ASND would never be in the ball game for this application at this customer - Sprint does seem to be all talk and no action these days so we'll see how quickly this gets to market. Eventually this will be a lucrative business for Cisco. Mind you, Cisco needs to keep up the flow of orders of this magnitude - it needs to at least triple its carrier revenues this year to satisfy Wall Street's expectations. As for gross margins, Cisco has done a great job keeping them high, but they probably will come down in 1999. The biggest reason is that semiconductor prices, particularly memory, are no longer in a free fall. Also, Cisco held the line on pricing in its modular switching and router product lines through most of 1998. In September, Cisco finally cut prices on most Cat 5000 products by 25-40%. Now the mix shift toward lower margin products and price cuts will begin to show very modest impact on overall gross margins - on the order of 20-50bp each quarter - certainly not the free fall some on this thread seem to expect.