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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: American Spirit who wrote (74945)	4/16/2001 7:51:15 PM
From: waverider	Read Replies (1) \| Respond to of 99985

Do you think the supposed Cisco insider who was buying Cisco stock under $20 who was revealed to you as a friend of a poster who you don't know which you used as an example of why Cisco was a good investment last week knew about this bit of inside Cisco news? Get out of the market and save yourself some grief. <H> Cisco Systems warns of more pain Revenue to fall 30 percent; 8,500 jobs to be cut By Chris Kraeuter, CBS.MarketWatch.com Last Update: 6:51 PM ET Apr 16, 2001 SAN JOSE, Calif. (CBS.MW) -- Cisco Systems stunned Wall Street late Monday with its second earnings warning in as many months, saying revenue will plunge 30 percent this quarter as the U.S. economic slump spreads around the world. The networking equipment giant also said it will need to cut as many as 8,500 jobs, which is 500 more than its worst-case scenario outlined in its first warning in March. "A hundred-year flood can happen in your lifetime," said Cisco Chief Executive John Chambers during a conference call. "The challenges in terms of projecting global business have never been more difficult," Chambers said. "Changes that used to occur over quarters are now occurring over months." Cisco Systems said its fiscal-third-quarter revenue would fall about 30 percent to $4.69 billion from sales of $6.7 billion in its second quarter. Analysts surveyed by First Call/Thomson Financial had expected revenue of $5.95 billion with earnings of 8 cents a share. According to a company statement, Cisco now expects earnings "in the very low single-digit range." "We didn't have a deceleration of demand, we had demand that just about stopped," said portfolio manager Jim Grefenstette with Federated Investors. "It's hurting everyone from the manufacturers down to the suppliers." In the fourth quarter, revenue is expected to be flat to a decline of 10 percent sequentially, the company said. Analysts had expected fourth-quarter revenue of $5.9 billion and earnings of 9 cents a share. Shares of Cisco (CSCO: news, msgs, alerts) closed down 78 cents, or 4.3 percent, at $17.20. After reopening from a trading halt, shares fell $1.23, or 7.2 percent, to $15.97 on Island ECN. Fund manager Grefenstette was not optimistic about what Cisco's latest announcement will mean for the company's stock price. "It seems like every week we get a new sign that [business] is worse than the week before," Grefenstette said. "The market is searching for a bottom in prices, as well as in fundamentals. I don't think we've found one yet." Charges FRONT PAGE NEWS Cisco Systems warns of more pain Nasdaq fumbles; Dow squeaks out a gain Oil climbs on refinery explosion First Union to buy rival Wachovia for $13 billion Tax tips for last-minute filers The networking products company will take a $2.5 billion excess-inventory charge during the third quarter and a restructuring charge of $800 million to $1.2 billion. The restructuring charge is made up of $300 million to $400 million in work-force reductions hitting 6,000 permanent employees and 2,500 temporary or contract workers, of $300 million to $500 million in consolidation of excess facilities, and $200 million to $300 million in asset impairment charges. The job layoffs amount to more than the cutbacks Cisco previewed March 9. At that time, Cisco had said it would cut 2,500 to 3,000 temp or contract workers and 3,000 to 5,000 regular employees. Cisco currently employs about 44,000 workers worldwide. The charge, expected by the fourth quarter, was pegged at between $300 million and $400 million. During the conference call, Chambers said job cuts are focused on profit contribution and are not necessarily across-the-board cuts. The restructuring charges are expected to save the company $1 billion annually beginning in the fourth quarter. The long term Chambers said he still believes in annual growth rates of 30 percent to 50 percent during a long-term time horizon. "These are stretch goals at the present time, but we will do our best to return to these levels," said Chambers. Grefenstette wasn't so sure, though. "When the industry starts to have normal demand again, it won't be as big," he said. "We'll wake up from this bad dream and we're going to find out the pie was smaller than it was and there are more competitors. A company like Cisco isn't going to see the pricing power, and they're not going to see the demand." Chambers said the current environment will hasten a competitor and customer shake out, one that he said Cisco will suffer through. "The strong will break away even faster," Chambers said, "but this is not the way we wanted to break away." Chris Kraeuter is a reporter for CBS.MarketWatch.com in San Francisco. Mike Tarsala contributed to this report. Do you think the poster's friend who was supposedly a Cisco insider who supposedly has been buying Cisco stock under $20 that you used as an example of why Cisco was a good investment knew about this? Get out of the market and save yourself some grief.