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To: Hop Sing who wrote (3135)	12/14/1997 9:16:00 PM
From: l. niedzwiecki	Respond to of 6980

CISCO DOWN ON INVENTORY WORRIES NEW YORK (Dow Jones)--Concerns that finished-goods inventories climbed last quarter pushed shares of Cisco Systems Inc. (CSCO) down 6% Friday in heavy trading. The inventory concerns stem from the company's 10Q filing with the Securities and Exchange Commission earlier this week. Since the filing on Tuesday, Cisco's shares have been weak, falling from Monday's close of 89 3/4 to 76 9/16. Compounding today's losses were SEC reports that several Cisco officers had sold shares in the company during November, analysts and investors said. In the 10Q filing, Cisco reported that finished-goods inventory rose to $69.7 million in the quarter ended Oct. 25, from $21.7 million in the preceding quarter. While higher inventory can indicate slowing sales, analysts by and large did not see signs that end-demand is softening. Instead, they said, much of the inventory buildup was probably of lower-end products designed for use by small and medium-sized businesses. Cisco sells these products through distributors and has been filling the distribution channel to meet growing end-demand. The inventory numbers reported in the 10Q may simply reflect this buildup as well as Cisco's policy of not recording revenue until products sell through to users, analysts said. Still, coming just a week after networking giants 3Com Corp. (COMS) and Cabletron Systems Inc. (CS) warned that they would miss estimates for their November quarters, the Cisco filing unnerved investors. One analyst also suggested that investors may be concerned because the company cautioned in the SEC filing that corporate spending on technology could be shifted from networking equipment to solutions to the Year 2000 problem. The analyst added, however, that this is nothing new and that the company has warned about it in past SEC filings. Cisco's shares also seem to be suffering from general market worries about business in Southeast Asia. Finally, the shares were also down after SEC filings revealed that several Cisco officers sold company stock in November. These include Chief Financial Officer Larry R. Carter, Senior Vice President Gary J. Daichendt and Chief Technology Officer Edward R. Kozel. Cisco's shares were recently down 6 1/8, or 7.4%, at 76 9/16, on Nasdaq volume of 26.7 million shares, compared with average daily volume of 8.6 million. Earlier, the shares traded as low as 76.

To: Hop Sing who wrote (3135)	12/15/1997 10:37:00 AM
From: Doug	Read Replies (1) \| Respond to of 6980

Hi Hop: Just a brief not of thanks for your detailed reply. Thx.

To: Hop Sing who wrote (3135)	12/15/1997 9:43:00 PM
From: Doug	Read Replies (1) \| Respond to of 6980

Hi Hop: Your emphasis on pure switches raised a few more Q's. Would appreciate some input from you or any other Engr regards pattern of traffic and backplane speeds at each end. Am I correct to assume that the bulk of the traffic is distrubuted as follows in the main: a: Household & SOHO's: Analog, Cable and ISDN. b: Enterprise: ISDN,Fast Ethernet and Fast ethernet/ATM backbone. c: Telcos: Frame,ISDN,ATM incoming and ATM backbone using DWDM or single channel multiplexing. If this is correct, then there will always be a need for convergence at the Telco/enterprise end. Because of this, IP switches may have better growth. On the other hand if you believe protocols will be static but networks within a local area will continously change in configuration , then Switches may grow faster since they can create VN's to cater for that. I would appreciate your guidance based on your experience. Regards.