DJ Communications Technology Stks Dn-2:Bottom Still Unclear
09 May 12:52
By Victoria Marcinkowski
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The lack of extensive guidance from Cisco Systems Inc.
(CSCO) on the company's third-quarter conference call Tuesday pulled down the
communications technology sector Wednesday.
"Investors' hope to see a bottom didn't materialize," said William R.
Becklean, an analyst with SunTrust Equitable Securities. Moreover, the
assumptions people had about a quick recovery in technology were not confirmed,
the analyst said.
"There is no bottom in sight for the next quarter or the quarter after that.
But there is a lot of assumptions out there," Becklean said.
The Dow Jones Equity Index of Communications Technology stocks was down
Wednesday, with Extreme Networks Inc. (EXTR), Powerwave Technologies Inc.
(PWAV) and 3Com Corp. (COMS) some of the hardest-hit stocks.
In a conference call with investors Tuesday, Cisco executives reiterated
previous forecasts that fourth-quarter revenue would be flat with the third
quarter or down as much as 10%. But Chief Financial Officer Larry Carter
declined to issue guidance beyond the fourth quarter, saying Cisco's ability to
predict results was limited. He said he expected the range of analysts'
estimates for Cisco's fiscal 2002 to remain wide.
Carter projected gross profit margins would be in the low- to mid-50s on a
percentage basis, compared with 54.5% in the third quarter.
The network equipment maker indicated that there could be little to no market
for its excess inventory in secondary markets. This comment spurred Merrill
Lynch analyst Mark Lipacis to conclude that "inventory levels in the
communications equipment supply chain are still at an all time high," Lipacis
wrote in a research note.
Cisco recently traded at $19.28, down $1.09 or 5%, while shares of Extreme
Networks were off $1.70, or 5%, at $32.88. Powerwave was down 88 cents, or
4.8%, at$17.31, while shares of 3Com lost 27 cents, or 4.4%, at $5.91.
However, some stocks in the index were holding up. Investors seemed to like
space-based communication, as shares of Loral Space & Communications Ltd. (LOR)
gained 38 cents, or 13%, at $3.14. Also, shares of Harmonic Inc. (HLIT), which
makes fiber optic systems for delivering data over cable, satellite and
wireless networks, gained $1.67, or 28%, to change hands at $7.66.
-Victoria Marcinkowski, Dow Jones Newswires, 201-938-2408
victoria.marcinkowski@dowjones.com
(END) DOW JONES NEWS 05-09-01
12:52 PM |
