Cisco Backlog Number Raises Concerns
Wednesday September 18, 12:58 pm ET
[entire economy could be grinding to a halt soon]
CHICAGO (Reuters) - Cisco Systems Inc. (NasdaqNM:CSCO - News), the largest maker of equipment that directs Internet traffic, said Wednesday its backlog of orders fell by 30 percent over the past year, raising concerns the company may not meet revenue expectations in its current quarter.
The San Jose, California-based company said in its annual 10-K filing with the U.S. Securities and Exchange Commission that its backlog was about $1.4 billion as of Sept. 9, compared with about $2 billion around the same point the previous year. Backlog includes orders for products to be shipped within 90 days. Cisco had a $3.83 billion backlog in September 2000, and a $922 million backlog in September 1999, a spokeswoman said.
"Cisco does not believe that its backlog, as of any particular date, is necessarily indicative of actual net sales for any future period," the company said in the filing. Cisco previously has said it is focused on reducing its product delivery lead time and improving customer satisfaction, and that leads to lower backlog figures.
Cisco's stock was off 34 cents, or 2.7 percent, at $12.20 in heavy Nasdaq composite trading Wednesday afternoon. The company said last month that it expects its fiscal first-quarter revenue to be flat to slightly up from the fourth quarter, when it posted sales of $4.8 billion.
Analysts expect Cisco to earn 13 cents a share, before one-time items, in its first quarter on revenue of $4.89 billion, according to Thomson First Call. In the same quarter last year, the company had revenue of $4.4 billion.
"You have a lower backlog and a higher revenue expectation right now. Obviously, that's a red flag because those two things go counter to each other," Prudential Securities analyst Inder Singh said.
He said he had heard Cisco's August business in its two largest segments, routers and switches, was slow, but there was still plenty of time to make up any possible shortfall as more than half the business was expected in the second half of a quarter that ends Oct. 26.
"It's still early to completely say that they're not going to make it," said Singh, who has a "buy" rating on Cisco's stock. |
