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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 71.08

+0.1%

Nov 7 9:30 AM EST

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To: RetiredNow who wrote (18234)	10/16/1998 7:06:00 PM
From: alex pierson	Read Replies (1) of 77397

Well the thing is the market is down because of earnings worries probably. But many companies have guided estimates down enough that even though they are not earning as much this quarter as they had been expected to earn maybe six months ago, they are beating the new lowered estimates....sort of surprising but really just disappointing a little less than the posted estimates. Not sure INTC guidance was exactly bubbling with enthusiasm by the way. The question for techs these days, is tech spending so profitable that companies will do it even in a slowdown. Seems reasonable that they will slow spending. So maybe tech earnings will dip for a while. And therefore depending how the outlook is, maybe the stocks will dip. Also may be important to look out for price competition hurting current leaders like INTC and CSCO. If units grow but pricing and margins come down... All in all if you are going to own these guys make sure you know what you are doing and watch out for slowing spending which may occur for the next few quarters (or maybe years if super unlucky). Regarding this question, MMC Networks has guided estimates lower for its earnings this coming quarter. 56% of their sales go to Cisco so could mean that if they are expecting to make about 20% less than had been thought, that it is because Cisco will be buying less from them. What does this indicate for Cisco next quarter. Are they already ordering fewer parts because they are expecting a slowdown? Anyone know about this situation? Alex P.

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