"hundreds of Cisco routers, for example, could flood the market for pennies on the dollar as a result of Enron's financial straits."
Broadband bust
Another casualty of Enron's reorganization could be a sprawling broadband network currently under construction. The company started building the network in 1998, during a telecommunications boom that assumed there was demand for an infinite supply of bandwidth. Since then, the networking unit of Enron has incurred steep losses, with the company reporting an $80 million loss for its most recent quarter
Enron owns 18,000 miles of fiber, according to the company. A representative for Enron's broadband business did not return phone calls seeking comment.
In a domino effect, Enron's woes could hit network equipment makers, such as Cisco Systems, Avici Systems, Ciena and Sycamore Networks, that have signed contracts with it to sell a wide array of gear for its network in recent years.
Sycamore, Avici and Cisco representatives said purchases from Enron are not part of their ongoing financial forecasts and they have already received payment for equipment shipped to Enron. A Ciena spokesman said Enron did not have a material impact on fiscal year 2000 earnings and, in keeping with company policy, would not comment further on Enron's purchases until it reports fiscal 2001 earnings. The company reports fiscal 2001 earnings Dec. 13.
But that does not alleviate the potential that hundreds of Cisco routers, for example, could flood the market for pennies on the dollar as a result of Enron's financial straits. That could force a company such as Cisco or Sycamore to either repurchase the gear---to take it off the market--or lose business in the short term as a result.
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