Californian wide area networking company, Ascend Communications Inc, has tried to arrest the accelerating decline in its share price in the wake of its disappointing third quarter’s results by issuing what it feels is an up-beat sales forecast. The shares have dropped $10 in the last 10 days of trading to a 52 week low of just $25 and Ascend has taken action to combat the industry rumors that it’s struggling to sell its switches. The company has admitted to experiencing uneven demand but blamed this on consolidation within its biggest market, the internet service providers. It now says that sales growth over the next six months will be between 5% and 10%. The reason for poor sales is due to problems shifting its remote access concentrators, and although it is slashing the prices by 20-30%, there is general reluctance to purchase equipment in the remote access market because of a lack of a single fast modem standard. Instead there is the marketing battle between the Rockwell/Lucent K56Flex standard that Ascend uses, and 3Com Corp’s x2. Ascend seems to be encountering the same problem that is afflicting its component supplier Rockwell International Corp (CI No 3,284), which has blamed a yearly drop in profits on low volume shipments of K56Flex.
