Monday March 12, 4:48 pm Eastern Time
SmartMoney.com - Market Analysis
The Cisco Fallout Continues
THE CISCO FALLOUT CONTINUES.
Former highflier Cisco Systems (NASDAQ:CSCO - news) dropped 8% further on Monday, three days after it spooked the market by announcing it would lay off up to 8,000 workers amid deteriorating economic conditions in the U.S.
Analysts at Credit Suisse First Boston, Merrill Lynch and other firms cut their profit forecasts for Cisco, the biggest maker of networking equipment.
Technology-sector investors were also jolted Monday after Sweden's Ericsson (NASDAQ:ERICY - news), the world's third-biggest mobile-phone maker, warned of a quarterly loss, taking down the stock of rivals like Nokia (NYSE:NOK - news).
More than 270 stocks hit new lows on the Nasdaq, including Cisco, which dropped $1.81 to $18.81 and was the most actively traded company on that market with nearly three times its average daily volume. Cisco ended at its lowest close in more than two years on a day in which all 30 companies in the Dow closed lower as the Dow tumbled 436 points to 10208.
Late Friday, Cisco Chief Executive John Chambers said the company's visibility is very limited and that he sees signs of the U.S. economic downturn beginning to spread to other global regions. Chambers cited a better than 50/50 chance that the slowdown is going to be more than a six-month phenomenon.
``It's pretty clear the Cisco news has shaken people up even further,'' said Graham Tanaka, president of Tanaka Growth fund. ``This is because John Chambers made the comment that the slowdown in capital spending could extend beyond two quarters.''
Cisco rival Juniper Networks (NASDAQ:JNPR - news) also fell sharply, as did Jabil Circuit (NYSE:JBL - news), which took a hit after UBS Warburg cut its rating due to weakness in Cisco, its largest customer. |
