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Technology Stocks : SDLI - JDSU transition -- Ignore unavailable to you. Want to Upgrade?

To: pat mudge who wrote (718)	3/13/2001 1:44:12 PM
From: SJS	Read Replies (1) \| Respond to of 3294

Comments from Briefing.com about CSCO from the ML conference. Note bolded optical comments: ____________ Cisco Systems (CSCO) 20 3/8 +1 9/16: Investors undaunted by the less than bullish intermediate-term outlook issued this morning by Cisco CEO John Chambers. Speaking at the Merrill Lynch Global Communications Conference, Chambers discussed a scenario in which the company has zero visibility into capital spending -- preventing the networking leader from giving reliable revenue projections for the year. The company has witnessed a dramatic reduction in capital spending, while at the same time facing an inventory glut. Cisco has seen inventory build up on all levels (at the company, in the supply chain and throughout the distribution channel). At present, it appears as if it will take at least two quarters to work off the excess. Once business does begin to improve, Mr. Chambers warns not to expect a V-shaped ramp in revenues to occur... The presentation wasn't all gloom and doom. One positive was Mr. Chambers' indication that the tough environment does not appear to have led to aggressive pricing in the marketplace. He also feels that the difficult landscape will give the company an opportunity to gain share, as customers look to do business with established companies that are going to be around... Comments on the optical space were not very encouraging, with Mr. Chambers suggesting that analysts significantly overestimated growth in the overall segment for the year. Notwithstanding, Cisco is optimistic about its own growth rate in the space this year... The take away from Mr. Chamber's comments is that the company has significant inventories to work off and has no visibility into when customer spending will pick up. The first issue alone is likely to take 2-3 quarters to overcome... The Cisco CEO set the stage for this morning's somber comments on Friday, when the company issued a press release confirming plans to reduce its workforce. Also contained in the release was a prediction that the slowdown in capital spending would extend beyond two quarters. So, why the aggressive accumulation of the shares today? Investors are feeling that it is good time to (re)enter CSCO now that Mr. Chambers has pushed the bar down for the next two quarters. One of the biggest fears in this market is being long a company at the time of an earnings warning. By issuing such a dim outlook, Cisco has set investors up not to be surprised by anything the company has to say the next couple of quarters. The hope is that Mr. Chambers is being intentionally pessimistic in an attempt to position company to outperform the dramatically lowered expectations. -- Damon Southward Briefing.com