Cisco Systems Inc last month eliminated any suspense surrounding its fiscal third-quarter results. Now investors hope the company sheds more light on how demand is shaping up for the rest of 2001.
The No. 1 maker of computer networking equipment said April 16 that sales in the quarter ended April 28 would fall 30 percent from the previous period as companies cut spending on switches, routers and other gear.
Tomorrow, Cisco will hold a conference call to discuss its results and outlook. Investors expect Chief Executive John Chambers to tell if he sees any signs of when Cisco might rebound from its first sales decline as a public company. He's also likely to say which products the San Jose, California-based company is chopping as part of its reorganization.
"My hope is that they can point to some signs of improvement," said Peter Conrad, who helps manage US$3.5 billion at Kopp Investment Advisors in Edina, Minnesota. "I don't know that that's realistic right now." Cisco shares rose US$0.98 to US$19.64 Friday. They have fallen 75 percent from a record close of US$80.06 on March 27 last year, wiping out more than US$400 billion in market value.
Still, the stock has jumped 43 percent in the past month amid optimism that the US economy won't slow further.
Cisco's profit, not including charges, acquisition costs and other items, fell to an estimated US$0.02 a share in the fiscal third quarter from US$0.13 a year earlier, according to the average forecast of analysts polled by First Call/Thomson Financial.
Sales dropped an estimated 4.8 percent to US$4.69 billion from US$4.93 billion. Cisco predicted last month that fiscal fourth-quarter revenue would be unchanged to 10 percent less than in the fiscal third quarter. Including charges and acquisition costs, Cisco will have a loss, analysts said. Cisco said last month it would take charges of US$300 million to US$400 million for job cuts, US$300 million to US$500 million for consolidating offices and related assets, and US$200 million to US$300 million for write-downs and goodwill.
* Cisco's shares have risen 43 percent in the past month amid optimism that the US economy won't slow further.
* Analysts forecast profit, excluding certain items, of US$0.02 a share in the period ending July 28, rising to US$0.05, US$0.07, US$0.08 and US$0.10 in the next four quarters.
* Cisco's corporate network business is expected to boost sales when customers resume spending on their networks.
The company is taking a US$2.5 billion charge to write off the value of excess inventory, mainly chips.
Cisco last month said it would fire 8,500 full-time and part-time employees, or about 18 percent if its workforce of 48,000.
Cisco has completed most of the firings, spokesman Steve Langdon said.
The company is trimming its product line as well. It announced April 4 that it would stop selling its most-expensive optical router because of weak sales.
Cisco also shut production of devices acquired from Hynex Ltd, Sentient Networks Inc and Fibex Systems, Morgan Stanley Dean Witter & Co analyst Christopher Stix wrote in a research note.
Cisco spokeswoman Abby Smith said the company doesn't comment on analyst reports.
Analysts, on average, expect a rebound in the quarter beginning July 29. They forecast profit, excluding certain items, of US$0.02 a share in the period ending July 28, rising to US$0.05, US$0.07, US$0.08 and US$0.10 in the next four quarters.
Not everyone sees an immediate jump, though: Profit estimates range from US$0.16 to US$0.56 a share for fiscal 2002, compared with US$0.35 to US$0.46 for fiscal 2001.
RSS