Part 3
The boom extends to companies that make semiconductors for
telecommunications equipment. As service providers buy more
switches and routers, the equipment makers need more chips.
Applied Micro Circuits Corp., whose products include chips
for data switches and fiber-optic equipment, will earn 18 cents a share, double a year ago. Profit at Xilinx will rise to 38 cents a share from 24 cents on sales to Cisco and 3Com Corp.
``The results are going to be very good,' said Eric Efron,
co-manager of the $1.45 billion USAA Aggressive Growth Fund, which owns Applied Micro Circuits and Cisco shares.
Copper Mountain Networks Inc. is helping to drive the
communications-chip business. The Palo Alto, California-based company sells equipment that combines traffic from digital subscriber lines to new phone companies such as NorthPoint Communications Group Inc.
It's benefiting as more people like Eclipsys's Robinson seek
higher-speed Internet access on DSL services, which increase the capacity of copper wires by as much as 125 times. Copper Mountain will earn 8 cents a share in the fourth quarter. A year earlier, it lost 10 cents a share.
Cisco's Push
DSL is part of Cisco's push into telecommunications from its
base in corporate networking. Sales to providers of Internet and phone service already make up a third of its revenue. In the fiscal second quarter ending Jan. 29, that business will
contribute about one-quarter of Cisco's profit, according to J.P. Morgan's Geiling.
Cisco's sales to corporations, government agencies and
educational institutions, which generate the rest of its revenue, aren't as strong. Some corporate customers have crimped spending on fears that the Year 2000 computer bug will disable the equipment in their networks.
``The money that would go to new equipment is being spent on Y2K,' said Brandywine's Cutler. ``Cisco won't have a record quarter.'
Cisco's profit in its second quarter will rise to 23 cents a
share from 18 cents. Although sales will increase about 41 percent to $4 billion, they'll climb at a slower pace than in previous quarters.
Chief Executive John Chambers has said the Y2K slowdown will
be a ``one-quarter phenomenon' for Cisco. Concern about the
glitch also is dimming corporate sales at Nortel and Lucent.
Next year, as Y2K issues fade, uses for the Internet that
weave in more video will trigger a bigger thirst for bandwidth. For companies with broad product lines focused on high-speed networking, it could be an even better of all possible worlds. `These guys really have to screw up to lose the momentum,' Cutler said.
4th-Qtr Year-Ago Number of
Company Estimate EPS Analysts
Lucent Technologies Inc. (a) $0.54 $0.49 31
Nortel Networks Corp. (b) 0.46 0.36 22
Cisco Systems Inc. (b) 0.23 0.18 36
Qualcomm Inc. (c) 0.95 0.33 15
Tellabs Inc. (a) 0.40 0.30 30
Xilinx Inc. (d) 0.38 0.24 24
JDS Uniphase Corp. (b) 0.31 0.15 34
SDL Inc. (a) 0.25 0.10 20
Advanced Micro Circuits Corp. (a) 0.18 0.09 13
Copper Mountain Networks Inc. 0.08 (0.10) 7
Juniper Networks Inc. 0.02 (0.24) 8
a) Earnings are restated to reflect acquisitions
b) Earnings are before acquisition costs
c) Per-share figures are before Dec. 30, 1999 4-for-1 stock split
d) Earnings are restated to reflect accounting change
Estimates provided by First Call/Thomson Financial
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