CISCO posts first ever quarterly loss
Wednesday, May 9th 2001, 12:00 am
By: News On 6
SAN JOSE, Calif. (AP) _ Cisco Systems Inc., the world's top supplier of network equipment and a bellwether in the technology sector, posted its first quarterly loss Tuesday.
The third quarter results still beat Wall Street's expectations and Cisco shares finished the regular session on the Nasdaq Stock Market up $1.12, or nearly 6 percent, to $20.37. Shares fell 42 cents to $19.95 in after-hours trading.
Chief executive John Chambers said he remained confident in the long-term outlook for the company.
But the leading provider of routers and switches that run the Internet has been hit hard by the slump in the technology market and the overall economic slowdown.
Just 14 months ago, Cisco was the world's most valuable company and the poster child of the New Economy. It is now laying off 8,500 workers and taking billions of dollars in inventory writedowns. Its market valuation has fallen from $560 billion to about $110 billion.
For the three months ended April 28, Cisco lost $2.69 billion compared with earnings of $641 million a year ago. Excluding one-time gains and losses, Cisco earned 3 cents per share. Analysts surveyed by Thomson Financial/First Call were expecting 2 cents per share.
Quarter-to-quarter sales also dropped for the first time in Cisco's 11-year history as a public company. Sales declined 29 percent.
``This may be the fastest deceleration any company of our size has ever experienced,'' Chambers said.
Cisco may be a victim of its own success and years of record growth and market domination, said Steve Kamman, an analyst at CIBC World Markets Corp.
``It's not the company's fault at all,'' he said. ``You can only grow as fast as your market _ and by virtue of having succeeded so well (Cisco) is very much the size of the market.''