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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Kenneth E. Phillipps who wrote (21884)	2/3/1999 1:33:00 PM
From: Zoltan!	Respond to of 77399

Cisco Systems Inc. Dow Jones Newswires -- February 3, 1999 3Com Off On Concerns Co. Contributed To Tech Data Shortfall By Joelle Tessler NEW YORK (Dow Jones)--3Com Corp. (COMS) shares fell 12% Wednesday, hit by a wave of concerns ranging from apprehension about a potential slowdown in the corporate market for networking equipment to worries about competition from industry giant Cisco Systems Inc. (CSCO). Also hurting the stock are rumors that a slowdown in the 3Com's business contributed to an earnings shortfall at Tech Data Corp. (TECD), a computer products distributor that resells low-end gear from the company. Cisco, which released its fiscal second-quarter earnings late Tuesday, warned that the enterprise - or corporate - networking market is seeing some slowing due to economic weakness overseas and a shift in resources to deal with the year 2000 problem. The company also cautioned it is seeing pricing pressure in the enterprise market, especially in the local area networking - or LAN - switching business, said Sanford C. Bernstein & Co. analyst Paul Sagawa. Both trends would be bad news for 3Com, which is also a major vendor of networking gear to corporate America. Pointing out that Cisco's results were nevertheless quite solid, Lazard Freres & Co. analyst Michael Duran added that investors are concerned that strength in that company's business means a weaker showing from competitors like 3Com as Cisco continues to take market share from them. For instance, he said, while Cisco did warn that the enterprise business saw the slowest growth of all of its businesses in the second quarter, sales to small and medium-size companies - a market segment where it competes quite directly with 3Com - were strong. In addition, Cisco indicated that sales of dial access products to carrier customers - telephone companies and Internet service providers - were particularly strong in the quarter, rising 20% sequentially. Noting that 3Com also competes with Cisco in this market, Duran said he is not sure if this is a sign that the entire business is doing well or that Cisco is simply gaining market share at 3Com's expense. 3Com's shares were recently down 5 5/16, or 12%, at 38 13/16 on volume of 19.5 million, compared with a daily average of 7.7 million. 3Com shares have also been rattled by a disappointing earnings outlook Tuesday from Tech Data, which resells many 3Com products like modems and adapter cards. Tech Data warned that results for its fiscal 1999 fourth quarter and full year, ended last month, and for its fiscal 2000 first quarter will fall short of expectations. According to Hambrecht & Quist analyst Farrokh Billimoria, investors are concerned that the problems at Tech Data could reflect weakness at 3Com and possibly be a sign that Tech Data is having trouble selling enough 3Com products to meet earnings projections. Still, 3Com products account for less than 10% of Tech Data's revenue. Finally, 3Com's shares are down after Donaldson Lufkin & Jenrette analyst Stephen Koffler warned that the company is facing pricing pressure in the adapter card market. The analyst also trimmed his earnings estimates on 3Com to 34 cents a share from 36 cents for its fiscal third quarter, ending February, and to $1.36 from $1.38 for the full fiscal 1999 year, ending May. 3Com posted earnings of 2 cents a share in the third quarter of last year and 67 cents for the full year. The analyst, who did not immediately return phone calls, left his buy rating on the stock unchanged. 3Com officials were not immediately available for comment. wsj.com