Bradley-
It's true that about one-third of CCSC sales are from Europe. However, the company expects North America and Asia to be the biggest growth areas this year. CCSC said that for their first quarter, European sales grew only 15% over last year, while North American sales grew 85%, Asian sales grew 200% and Latin American sales grew 55%. Even if European sales are flat, which is possible, I don't think that will affect the overall picture much. The demand for CCSC's new products is very high and I'd be surprised to see a problem similar to Cabletron's.
Remember that CS had several problems, not simply poor European sales. They also had trouble getting enough of a particular ASIC that was needed in their SmartSwitch. Without the part, they couldn't produce enough SmartSwitches. Also, I think that the COMS/INTC price cuts on hubs affected CS a bit. Also, CS is in the last stages of a product transition, in which their old products are being phased out by their new ones. Finally, with all the new technologies being introduced in the computing/networking area, many customers are waiting to see the dust settle. This problem is more common in the computer networking market than in the telecommunications market.
I'm not concerned about CCSC's stock movement. In fact, last week in a post techstocks.com I mentioned that CCSC was about to enter a resistance area. Sure enough, Friday, the stock faced selling pressure from those people who didn't sell the last 2 times it reached $25. I see this as nothing more than a technical move, having no fundamental connection to the company.
I hope you didn't buy CS too soon. I try not to buy a stock with a preannounced shortfall, until after the actual earnings are released. If CS mentions that earnings will be bad in the next quarter, the stock will certainly fall to its lows.
I see CCSC as a better buy than CS right now.
Todd |
