Cisco Subdues LR Index

The Light Reading Index closes down on Cisco's cautionary words; Redback hops on Williams deal

January 30, 2001

2 Min Read
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The Light Reading Index closed down 4.85 (0.65%) to 743.37 today as traders waited out the results of the Federal Reserves meeting tomorrow and Wednesday. If the Fed decides to cut interest rates it will probably do so on Wednesday at 2:15 PM EST.

Cautionary words from Cisco Systems Inc. (Nasdaq: CSCO) CEO John Chambers also weighed on the index. This weekend Chambers spoke at the World Economic Forum Conference in Davos, Switzerland, saying business had been slow for Cisco during December and January, according to Bloomberg. Chambers also pointed out that the pressure was coming from the provider space rather than its enterprise customers. Chambers last spoke at an investor conference on January 10 (see Chambers: Cisco's Ready to Brawl).

Cisco is scheduled to announce its earnings on February 6. Salomon Smith Barney expects Cisco to meet or beat earning expectations this quarter. Revenues are expected to be $6.96 billion or 19 cents per share. However, Alex Henderson, an analyst at Salomon Smith Barney, lowered 2001 revenue estimates for Cisco to $28 billion from $29.2 billion, citing “a broad economic slowdown.”

Redback Networks Inc. (Nasdaq: RBAK) announced a two-year $120 million dollar deal with Williams Communications Group (NYSE: WCG) for its SmartEdge platform (see Redback Lands Deal With Williams ). It is the largest deal that Redback has announced so far. Redback closed up 4.75 (11.34%) to 46.63.

AT&T Corp. (NYSE: T) today announced dismal earnings that were in line with estimates. Estimates were lowered substantially when the company cut its dividend for the first time ever in early December (see Light Reading Index Hits a New Low). AT&T is an incumbent carrier with many of its networks based on circuit switched technology, and this architecture appears to be holding back the company's growth.Carriers driven predominately by packet-based technology, including Qwest Communications International Corp. (NYSE:Q), Level 3 Communications Inc. (Nasdaq: LVLT), and Broadwing Communications (NYSE: BRW), all announced more solid earnings reports last week.

-- Matt Malina, research associate, Light Reading

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