Cisco Systems warns of more pain Revenue to fall 30%, and 8,500 jobs to be cut
By Chris Kraeuter, CBS.MarketWatch.com
Last Update: 4:49 PM ET Apr 16, 2001
SAN JOSE (CBS.MW) -- Cisco Systems on Monday warned investors to brace for worse-than-expected third and fourth quarter results and said it will slash thousands of more jobs as economic problems in the U.S. spread to the rest of the world.
Cisco Systems said its fiscal third-quarter revenue will fall about 30 percent to $4.69 billion from $6.7 billion in its fiscal second quarter.
Analysts surveyed by First Call/Thomson Financial had expected revenue of $5.95 billion with earnings of 8 cents a share.
According to a company statement, Cisco now expects earnings "in the very low, single-digit range."
In the fourth quarter, revenue is expected to be flat to a decline of 10 percent sequentially, the company said.
Analysts had expected fourth-quarter revenue of $5.9 billion and earnings of 9 cents a share.
Shares of Cisco (CSCO) closed down 78 cents, or 4.3 percent, at $17.20. After reopening from a trading halt, shares fell $1.43, or 8.3 percent, to $15.77 on Island ECN.
Charges
The networking products company will take a $2.5 billion excess inventory charge during the third quarter and a restructuring charge of $800 million to $1.2 billion.
The restructuring charge is made up of $300 million to $400 million in workforce reductions of 6,000 permanent employees and 2,500 temp or contract workers, of $300 million to $500 million in consolidation of excess facilities, and $200 million to $300 million in asset impairment charges.
The job layoffs are more than the layoffs previewed on March 9. At that time, Cisco had said it would cut 2,500 to 3,000 temp or contract workers and 3,000 to 5,000 regular employees. The charge, expected by the fourth quarter, was pegged at between $300 million to $400 million.
Chris Kraeuter is a reporter for CBS.MarketWatch.com in San Francisco. |
