Cisco posts first-
ever net loss

Associated Press

NEW YORK >> In the latest sign of how the New Economy has faltered, Cisco Systems Inc. today posted its first-ever net loss in the third quarter.

The world's top supplier of network equipment lost $2.69 billion, or $0.37 per share, in the three months ended April 29. In the same period a year ago, Cisco earned $641 million or $0.08 per share.

Excluding charges for layoffs, restructuring and inventory, the company would have earned $230 million, or 3 cents per share. Analysts surveyed by Thomson Financial/First Call were expecting earnings of 2 cents per share.

Quarter-to-quarter and year-to-year sales also dropped for the first time in Cisco's 11-year history as a public company. Sales declined 29 percent, to $4.73 billion from $6.7 billion last quarter. They were off 4 percent from the $4.9 billion posted in the third quarter last year.

"This may be the fastest deceleration any company of our size has ever experienced," Chief Executive John Chambers said.

Cisco will take a one-time charge of $800 million to $1.2 billion for restructuring, including $300 million to $400 million as a result of the job cuts. The company also said it would take an excess inventory charge of about $2.5 billion. Before the announcement, investors were optimistic that Cisco's report would contain some good news. Shares of Cisco were up $1.11, or nearly 6 percent, to $20.36.

Meanwhile, the stock market finished mixed ahead of Cisco's earnings announcement.

The Dow Jones industrial average closed down 51.66 at 10,883.51. The Nasdaq composite index was up 25.20 at 2,198.77 and the Standard & Poor's 500 index dropped 2.33 to 1,261.18. The NYSE composite index fell 2.51 to 636.51, the American Stock Exchange composite index rose 1.55 to 937.02 and the Russell 2000 index gained 2.13 to 491.77.

Advancers led decliners 15 to 14 on the New York Stock Exchange, with 1,598 up, 1,459 down and 219 unchanged. Volume was 990.38 million shares vs. 928.92 million yesterday.

The Treasury's 10-year note fell 10/32 to 98-6/32; its yield rose 4 basis points to 5.24 percent. The 30-year bond dropped 26/32 to 94-31/32; its yield rose 6 basis points to 5.73 percent.

Today's economic data added to the tentativeness.

The Labor Department reported that Americans' productivity, a key measure of rising living standards, fell at a 0.1 percent rate in the first quarter, the first decline in six years.

Honolulu-based Schuler Homes' stock stayed on fire ahead of tomorrow's earnings report. The stock jumped 95 cents to $17.06 and now has gained 53.7 percent over the last nine trading days.