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Strategies & Market Trends : Guidance II -- Ignore unavailable to you. Want to Upgrade?

To: SusieQ1065 who wrote (174)	2/28/2002 9:45:20 PM
From: 2MAR$	Read Replies (1) \| Respond to of 2077

Riverstone Shares Plunge After Company Warns Thu Feb 28, 6:47 PM ET chart stockcharts.com[h,a]daclyiay[pc5!c20!f][vc60][iut!Lh5,5!La12,26,9]&pref=G SANTA CLARA, Calif. (Reuters) - Shares in Riverstone Networks Inc. lost half their value on Thursday after the network equipment maker said it was cutting its work force and would miss fourth-quarter earnings estimates as the slump in the telecommunications market deepened. Riverstone shares plunged $3.77, or 49.7 percent, to close at $3.82 -- the biggest percentage loser and third-most active issue on the Nasdaq market. The warning rattled investors in other network gear makers because they had viewed Riverstone and its focus on underdeveloped urban area networks as a relatively safer play in an industry struggling to find a bottom. The American Stock Exchange Networking Index<.NWX> fell 2 percent, compared with a 1 percent drop in the Nasdaq Composite index.<.IXIC> Santa Clara, California-based Riverstone said it expects to break even or report a slight loss for the fourth quarter on revenues of $50 million to $54 million. That estimate excluded unusual charges, goodwill amortization and stock compensation, it said. Analysts, on average, had expected the company to earn 4 cents per share in the quarter, according to research firm Thomson Financial/First Call. Riverstone said it will cut costs by about 10 percent and an unspecified number of jobs. Fourth-quarter charges should be between $26 million and $30 million, it said. While Pacific Growth Equities said in a note to clients on Thursday that it was maintaining its "Buy" rating on Riverstone shares "based on long-term fundamentals," other brokerages focused on the wobbly near-term. DIMINISHED EXPECTATIONS SG Cowen said it expected to cut its estimates on Riverstone after the pre-announcement, and said its checks indicated business overall for the sector was worse in Europe than originally expected. Wachovia Securities cut its rating on Riverstone stock to "Market Perform" from "Buy" on Thursday, based on what it said was a difficult spending environment for Riverstone products. Riverstone on Thursday said its lower financial forecast reflected "deteriorating market conditions, primarily in the U.S. and Europe, which have caused service providers and carriers to delay infrastructure build outs." "There have been some indicators from carriers that it is going to be a slow period," a Riverstone spokesman told Reuters. BEYOND CAPITAL SPENDING Pacific Growth Equities analyst Erik Suppiger, however, said investor concerns for network gear makers now go beyond carrier spending -- because many carriers are on the ropes financially. "Among service providers, things are just horrid," Suppiger said. "We've seen Global Crossing file for bankruptcy. Qwest was not able to renew its commercial paper. Williams Communications indicated they are evaluating filing for bankruptcy." Investors punished Riverstone shares because the company had presented itself as a safer play among network gear makers as its equipment is designed for urban area networks, where carriers are expected to tap pent up demand from businesses and consumers eager to get online, Suppiger said. By contrast, the long-haul, long distance segment of the network gear market offered little hope for immediate growth to network equipment vendors because of an equipment inventory and broadband capacity glut. "There had been some anticipation that the metro-market, the area Riverstone sells into, would be insulated," Suppiger said. "But budget cuts have reached the point that service providers are looking to cut in metro just as they have cut in other parts of their business." Riverstone President and Chief Executive Romulus Pereira at a San Francisco investor conference said the company is poised to rebound faster than other network gear makers. Carrier spending for urban-area equipment will still recover sooner than spending in other networking sectors, Pereira said. ** The Fibre Glut looks easily to extend out to 2004 or 05 bur we knew that ;-)