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Strategies & Market Trends : Bill Wexler's Profits of DOOM -- Ignore unavailable to you. Want to Upgrade?

To: Y2k_fan who wrote (3419)	10/5/1998 10:11:00 PM
From: Peter V	Respond to of 4634

Posting this for information only, I have no opinion on CSCO. From briefing.com: CISCO SYSTEMS INC (CSCO) 48 -7 3/4. Investors are finally beginning to grasp that given current world economic conditions, Cisco Systems will struggle to maintain its "island of prosperity" status in the intensely-competitive networking group. Cisco has been one of the few major names in this arena that hasn't already experienced a sharp downturn in its business. (e.g., Newbridge Networks' earnings fell 22% last quarter, while 3Com experienced a 49% drop). Today, shares of the leading networking equipment manufacturer and tech bellwether have tumbled 14%, on 3 times average daily volume, following a SG Cowen downgrade. Before the open, Cowen analyst Chris Stix cut his rating on the stock from "strong buy" to "buy," citing signs of a slowdown in enterprise IT capital spending for 1999. In a survey conducted by Cowen, the firm found that 36% of financial services corespondents have reduced their IT technology budgets. Mr. Stix estimates that 15%-20% of Cisco's sales are derived from financial services companies, while enterprise spending accounts for 75% of sales. Additionally, the analyst is disturbed by distributor checks that suggest networking projects are being delayed, as well as signs that the fast ethernet upgrade cycle will mature in 1999. And, in spite of weakness in the U.S. equity markets, Mr. Stix notes that Cisco still trades near the high-end of its historical valuation range. Based on Cisco's backlog, the analyst believes Q1 is on track. However, he is less optimistic regarding the full year. Mr. Stix is doing his part to ease expectations lower by reducing his full year 1999 earnings estimate by 2 cents to $1.44 (First Call mean $1.45) and his 2000 forecast by 9 cents to $1.76 (First Call mean $1.81).