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Strategies & Market Trends : The Thread -- Ignore unavailable to you. Want to Upgrade?

To: Smart_Money who wrote (43791)	4/16/2001 6:06:42 PM
From: AD	Respond to of 49816

Cisco Revenue to Fall Well Short Of Estimates Amid Business Slowdown Networking-Equipment Giant Sets Plans To Lay Off 8,500 Workers, Take Big Charge A WSJ.COM News Roundup SAN JOSE, Calif. -- Cisco Systems Inc. said it will report a sharp drop in quarterly revenue and lay off 8,500 workers as the company grapples with what it described as an unprecedented slump in the networking-equipment business. Cisco expects revenue for its fiscal third quarter to be down about 30% sequentially from the fiscal second quarter, when sales totaled $6.7 billion. That puts third-quarter revenue at about $4.7 billion. The company said it expects to be profitable for the third quarter, with earnings per share, excluding certain items, to be in the "very low, single-digit range." For the fiscal third quarter, which ends later this month, analysts were expecting earnings of eight cents a share on revenue of $5.95 billion, according to Thomson Financial/First Call. Cisco said it plans to reduce its work force by about 8,500 people, which includes 2,500 temporary and contract workers. The cuts were about in line with earlier predictions. Last month, Cisco had warned of impending reductions, and said it would cut 3,000 to 5,000 of its full-time employees, and as many as 3,000 of its 4,000 temporary and contract workers. Cisco expects to take a one-time charge of about $300 million to $400 million in the fiscal third quarter related to the reduction in work force. Adding in impaired goodwill and other assets, as well an excess facilities charge, Cisco expects to take a restructuring charge of roughly $800 million to $1.2 billion during the fiscal third quarter. In addition, Cisco expects to take an excess inventory charge of about $2.5 billion during its fiscal third quarter. Cisco's inventory balance, at the end of the third quarter of fiscal year 2001, is expected to be about $1.6 billion after this charge, the company said. Cisco blamed the world-wide economic slowdown, a slump in the telecommunications market and a deceleration in corporate information-technology spending for the weak sales. The company said its long-term revenue expectations remain at 30% to 50% growth a year. John Chambers, president and chief executive, said in a prepared statement: "The business environment that our segment of the IT industry is facing has never been more challenging. In fact, this may be the fastest any industry our size has ever decelerated, which has required us to make difficult business decisions at an unprecedented speed." When the reduction in headcount is fully implemented, Cisco believes the actions will reduce its overall cost structure by about $1 billion on an annualized basis. Initial savings will begin during the fiscal fourth quarter of 2001, the company said.