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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!

LRCX 156.00

+0.6%

Nov 28 9:30 AM EST

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To: Q. who wrote (9867)	6/3/2001 12:06:49 PM
From: banzai11	Read Replies (1) of 10921

Cisco Says Telecom-Gear Sales Still Slow, Inventory Levels High By Scott Thurm Staff Reporter of The Wall Street Journal Cisco Systems Inc. sees no end to the slowdown in spending by telecommunications companies, according to a filing with the Securities and Exchange Commission. In a 10-Q for its fiscal third quarter, filed Friday, the San Jose, Calif., maker of Internet-switching gear said it expects the capital constraints that have driven some telecoms out of business and forced others to scale back expansion plans "will continue for the foreseeable future." Cisco also added new warnings for investors about the potential impact of the California electricity crisis and the impact of its declining stock price on its ability to recruit and retain employees. Cisco said rolling blackouts could disrupt its business as well as its suppliers, leading to possible product shortages or cost increases. Despite writing off $2.25 billion of excess inventory during the third quarter, Cisco said its inventory levels remain "higher than our current sales forecasts" and could result in additional write-offs. Controller Dennis Powell said the warning was a standard part of recent Cisco filings. "That's not to say we have a huge inventory charge yet to come," Mr. Powell said. The filing also detailed for the first time the $289 million in goodwill that Cisco wrote off during the third quarter. The charges stem from past acquisitions where Cisco is now eliminating products. Cisco said it wrote off $108 million in goodwill associated with its acquisition of Monterey Networks Inc., which made a fiber-optic switch that Cisco said in March it would discontinue. Cisco also wrote off $79 million related to its acquisition of HyNEX Ltd., $53 million related to its acquisition of Clarity Wireless and $49 million related to other acquisitions. But Cisco said in the filing that it would continue making acquisitions. Cisco also said it would continue extending credit and financing to customers, despite increasing losses from those loans. Cisco increased its provision for doubtful accounts to $150 million at the end of the third quarter on April 28, compared with $89 million on January 27. Mr. Powell said that increase didn't represent bad financing deals, but other Cisco customers who are having trouble paying their bills because of the economic downturn. Write to Scott Thurm at scott.thurm@wsj.com

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