Fear of lower Cisco sales sinks MMC Networks
By Bloomberg News
Special to CNET News.com
November 3, 1999, 6:00 p.m. PT
Shares of MMC Networks fell 34 percent on concern that the maker of networking chips could have lower-than-expected fourth-quarter sales to Cisco Systems, its biggest customer.
MMC fell 9.19 to 17.63, its lowest closing price since April. Trading of 9.19 million shares was more than eight times the firm's three-month daily average. It was the third-biggest one-day percentage drop ever for the Sunnyvale, California-based company.
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Investors are concerned that Cisco may be delaying chip orders because of slack sales related to the Year 2000 problem. Two months ago, MMC shares had their biggest one-day drop after IBM decided to stop making networking products using MMC's chips.
"People are looking at the near-term issues only, not the incredibly strong prospects for next year," said Peter Andrew, an analyst at AG Edwards, who rates MMC shares a "buy."
MMC executives said at a Deutsche Banc Alex. Brown conference today that the company hasn't yet received anticipated orders from two major customers this quarter, Andrew said.
Cisco accounted for about 54 percent of MMC's $23.1 million in third-quarter revenue, he said.
Cisco has said that its prospects for the second quarter ending in January are hard to predict because some customers may delay orders as they focus on making their computer systems Y2K compliant.
MMC officials couldn't be immediately reached to comment. Cisco declined to comment except to say that MMC "continues to be an important vendor partner." |
