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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (50136)	3/18/2001 12:00:21 AM
From: MHA	Read Replies (2) \| Respond to of 77397

Mindmeld: From what I hear is that Cisco plans to terminate contractors (no work, big pay checks!) and also layoff the lower 5% (which they do it every year), so contractors + 5% is approx 5K employees will be effected. They MIGHT layoff another 5% but that will not happen before june/july. Also, business is NOT that bad, I heard the run rate is still over 6 billion for the qtr. but what I heard could be wrong!!!

To: RetiredNow who wrote (50136)	3/18/2001 1:53:49 PM
From: Jacob Snyder	Read Replies (3) \| Respond to of 77397

re: Big Bath: I think you may be right. I'd say they have a lot of cleaning up to do, from the years of Creative Accounting. It is certainly a pattern for companies to try and get all the bad news out in one big bad report (and hope investors ignore it as a "one-time event"). Unfortunately, companies don't seem to be able to avoid wishful thinking, so, another pattern is for "one-time events" to get repeated. So, I think the odds are, one bad report gets followed by at least one more. If Cisco is really not going to be buying any more companies, using CSCO (the stock) to pay for acquisitions, then it is a lot less important to try and keep the stock up. And I don't think they need to worry about employees leaving if their employee options are underwater (where are they going to go to?). So, it may be that the company is going to "take the long view" and not worry about what happens to the stock price, at least for the remainder of 2001. We've already taken out my guess about the 2001 bottom. I think the best thing to do now, is just let the market tell us. Look at the WCOM chart: siliconinvestor.com When the CSCO chart looks like that, then, and only then, will it be safe to take a long-term position. That is, the stock needs to stop going down, go into a horizontal range, stop the pattern of lower lows and lower highs, and stay flat for several months. Not days, not weeks, but months. Until then, only shorts and very-short-term traders will make money in CSCO. I don't think we need to worry about a quick 1987 or 1998-style rebound. The first rebound off the bottom will be all given back, and maybe the second and third, as well. I also don't think we need to worry about a 1929. Rather, I think we're looking at something between a 1990 and a 1973. Consumers are going to look at their stock portfolios, and (with a 1-3 year lag) realize they need to spend less and save more. Housing prices will come down, and people are going to realise it isn't a good idea to take out a home equity loan to pay for that vacation to Bali. Stocks and housing is where Americans have their wealth. We are just at the beginning of the decline in consumer spending. The hope for a 2H01 recovery is going to evaporate. A lot of stocks are still (still!) held up by that hope. Semi-equips in particular. Eventually, I'll be buying a lot of out-of-the-money longest-term CSCO calls. But not yet. For now, I am firmly on the sidelines.

To: RetiredNow who wrote (50136)	3/20/2001 9:43:33 AM
From: RetiredNow	Read Replies (4) \| Respond to of 77397

Hi thread, I think I'm about to short Cisco for the first time ever. I really think they are about to take a big bath this quarter. All my reasoning and the evidence from all the articles I've read points to it. So I'm going to wait for the pop from the Fed rate cut and then short all the way to $16. I bet it goes lower than that when all the bad news starts coming out, but I'll take $4 and change. Then when Cisco hits $15, I'm going to load the truck up with my profits from the short. I think this might take about a month. By the time Cisco releases it's earnings in May, all the bad news should be out. Wish me luck all! This is about as risky as I get. Last time I shorted a stock was in 1998. Or was it 1999? I can't remember, but the stock was PSFT and boy did that sucker come down.

To: RetiredNow who wrote (50136)	3/23/2001 4:49:45 PM
From: RetiredNow	Respond to of 77397

HI thread, it looks like this analyst thinks the same thing I think and damned if he didn't come up with the same number I did ($1 billion in one time charges)! www2.marketwatch.com Sell-side sparks Cisco stumble By Susan Lerner, CBS.MarketWatch.com Last Update: 3:58 PM ET Mar 23, 2001 NEW YORK (CBS.MW) -- One tech bellwether noticeably absent from Friday's rally were shares of Cisco. Could it maybe, possibly, probably have something to do with some not so nice talk from the sell-side? "Don't Buy Yet!" was the headline of Paul Sagawa's research note on the networking giant (CSCO: news, msgs, alerts) Friday. "While Cisco now trades well below our estimated fair value of $25-$30 we see significant negative emerging for the near-term and would not buy until the bad news is on the table," the Sanford Bernstein analyst told clients. Specifically, Sagawa said industry checks suggest that sales for the fiscal 2001 third quarter (April) may be down more than 15 percent sequentially rather than management's "guidance" of a 5 percent decline. FRONT PAGE NEWS Stocks end week on bullish track Motorola slashes another 4,000 jobs Foreign shares trading in U.S. hit hard Stock funds bleed record $15 billion What has Salon unleashed on us all? "Moreover, efforts to reduce bulging inventories and renegotiate manufacturing commitments are unlikely to have had any real traction in the quarter, while price competition in may product categories has intensified, yielding added pressure to margins," Sagawa wrote. "We (also) expect significant write-offs for inventories, sharp increases in provisions for doubtful accounts, mark-downs of billions of dollars in private investments, and restructuring costs to yield more than $1 billion in extraordinary charges over the next two quarters." Adding to the negatives surrounding Cisco, Sagawa said he thinks the company may issue a new round of employee options to shore up "flagging employee morale," which also would dilute "beleaguered" shareholders. Against that backdrop, Sagawa cut his fiscal 2001 earnings per share estimate to 63 cents from 50 cents and his fiscal 2002 number to 61 cents from 70 cents. His rating on the stock is "market perform" but Sagawa said he expects to grow "considerably more positive" on the stock once all the bad news is on the table at an entry point below $15 per share. Sagawa's were just some of several comments from the analysts that helped to push Cisco shares to a new low of $18.31 intraday on Friday. The stock was trading off that low at $18.88 in late afternoon action. SG Cowen analyst Christin Armacost also dropped her estimates and cut her price target on the shares to $29 to reflect continued weakness in the business outlook, while First Union Securities analyst Stephen Koffler said he was cutting his numbers to reflect continued negative news flow in the industry. "In discussions with well-placed industry sources at the Optical Fiber Conference this week, the very challenging industry environment was confirmed and even amplified," Koffler wrote in his research note. "Nobody we spoke to believes that service provider spending will improve before the beginning of next year. The component and EMS channel are seeing no relief (and) all the major players who sell to Cisco have seen push backs and are talking about lower visibility." Koffler cut his revenue estimate for the April quarter to $5.7 billion from $5.9 billion, which he said represents a 12 percent sequential decline, and he lowered his earnings per share estimate for the quarter to 9 cents from 11 cents. For all of fiscal 2001, he cut his revenue number to $24.6 billion from $25.1 billion and his earnings forecast to 55 cents a share from 58 cents. His numbers for fiscal 2002 went to $26.3 billion from $27.9 billion on revenues and to 63 cents a share from 68 cents for earnings. Koffler also suggested the possibility of a warning from the company. "Although we have no proprietary knowledge of Cisco's intention to pre-announce results, we intuitively think that revenues at or below $5.6 billion would be the level the company would seriously consider pre-announcing," Koffler said. "We tend to think a pre-announcement would drive the stock to the low-to-mid teens." Yet despite spewing all those negatives, Koffler left his "strong buy" recommendation intact because he believes the company's current challenges are nearly all macro driven and that relative to its large competitors Cisco's issues related to product transitions and execution are minor. "We believe that because of excellent positioning, a leaner operation, and strong management, the company will emerge from this industry slowdown with greater and more profitable market share gains," Koffler concluded. Susan Lerner is a reporter for CBS.MarketWatch.com.