Cisco Systems Inc shares surged 22 percent after Chief Executive John Chambers said he's "very comfortable" with analysts' sales and profit estimates for the quarter ending Oct. 27.
The shares rose US$2.47 to US$13.95, erasing most of their decline since the Sept. 11 terrorist attacks. The stock had plunged 70 percent this year. Shares of Juniper Networks Inc, Broadcom Corp and Sun Microsystems Inc also rose.
Analysts and investors had been speculating that Cisco, the largest maker of computer-networking equipment and a technology bellwether, may miss fiscal first-quarter targets because of weakening economies, reduced spending by telecommunications clients and disruption to sales from the attacks on the US.
"It's just some relief that this quarter is OK in spite of the events of Sept. 11," said Shawn Campbell, communications-equipment analyst at Northern Trust Corp, which held 54.6 million Cisco shares as of June 30.
Chambers' remarks came during a speech at the Goldman, Sachs & Co Communacopia X investors conference in New York. The stock's percentage gain was the second-biggest ever for Cisco, which first sold shares to the public in 1990. The stock jumped 24 percent after the Federal Reserve's surprise interest-rate cut on Jan. 3, 2001.
Shares of rival Juniper Networks yesterday rose US$2.47, or 26 percent, to US$12. Chipmaker Broadcom increased US$2.49, or 13 percent, to US$22.09, and computer maker Sun Microsystems climbed US$0.99, or 12 percent, to US$9.
About 195.6 million Cisco shares were traded, the seventh-busiest day for a US stock. Cisco shares are responsible for five of the 10 most-active days.
San Jose, California-based Cisco is expected to report first-quarter profit, excluding acquisition-related and stock-compensation costs, of US$0.02 a share on revenue of US$4.16 billion, the average estimates of analysts polled by Thomson Financial/First Call.
On that basis, which doesn't conform to generally accepted accounting principles, Cisco earned US$0.18 a share a year earlier on revenue of US$6.52 billion.
"I am very comfortable with the consensus estimates," Chambers said near the end of his 40-minute presentation, which preceded a 15-minute question-and-answer session.
Cisco predicted on Aug. 7 that first-quarter revenue would be unchanged to down 5 percent from the fourth quarter's US$4.3 billion, implying a low of US$4.09 billion. On Aug. 23, Cisco affirmed that orders were meeting its forecast so far.
In several instances earlier this year, Chambers indicated that the company wouldn't meet profit and sales estimates at the time. Last November, the company said fiscal 2001 revenue would rise 50 percent to 60 percent; it ended up increasing 18 percent.
Chambers said there was a "moderate disruption" to sales from the terrorist attacks. He didn't say how much revenue the company lost, and he declined to give a second-quarter forecast.
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