X

Delay sends Ascend stock down

Stock in the remote access company takes a hit because of increased competition and a delay in shipment of a modem software upgrade.

2 min read
Ascend Communications' (ASND) stock took a hit today because of a glitch that will delay shipment of a modem software upgrade and increased competition in the remote access market.

The remote access hardware kingpin's stock dropped 13 percent in trading to close at 41-3/8, down 6-1/4 from yesterday, as a UBS Securities analyst downgraded the company's stock. That followed an announcement that Ascend would delay shipping software that allows Rockwell International-based K56Flex modems to work in the company's enterprise remote access hardware platforms.

Ascend's MAX-TNT remote access box is used by many Internet service providers, telecommunications carriers, and large corporate enterprises. It allows users to dial in to the Internet or to an internal network.

The latest 56-kbps modem cards and accompanying software for the MAX-TNT box are being offered for free, which sent out warning signals to the financial community that revenues for the quarter might not meet expectation. A delay in the software release will also backload Ascend's revenues for the quarter, a practice that makes analysts uneasy.

The UBS analyst, Nikos Theodosopoulos, remains bullish on the long-term prospects for the stock, citing demand for the remote access hardware along with the company's GRF line of routers.

The company did have some good news last week, announcing that regional ISP Erol's Internet had agreed to use the 56K MAX-TNT wide area remote access switches throughout its 83 point-of-presence locations in eight large markets on the East Coast.

But the stock plunge may reflect a feeling that Ascend's advantage in the remote access hardware market is waning. The San Jose, California-based Cisco Systems recently introduced an enterprise-class remote access box (See related story) that could take market share away from Ascend's popular MAX-TNT platforms when it ships within three months.

In a related development, Ascend and Cascade Communications announced the end of the federal antitrust waiting period, paving the way for the two networking companies to merge. Completion of the deal is expected by the end of this month.

Ascend agreed to buy Cascade in March for about $3.7 billion in stock.