Another day, another hit piece. Barron’s was at it again, after the paper
published Wanna Buy a Bridge over the weekend. This time around, the
target was everyone’s favorite networking darling, Cisco Systems
.
Barron’s called Cisco a house of cards set to come tumbling down, citing
the company’s slowing profit growth. Merrill Lynch ran to Cisco’s defense
today, but the damage was already done.
The blue chipper shed nearly $30 billion in market cap, tumbling 4-7/8 by
the end of the trading day, dragging the broader market underwater. Cisco
reports Q3 results after the bell tomorrow, and consensus estimates are
looking for $0.13 per share.
Market watchers expect light volume on the stock market, and subsequently
more volatility, as investors brace for the Fed’s policy meeting May 16.
Many analysts expect policy makers to lift short-term interest rates by an
aggressive half percentage point to 6.5%, but others maintain a more
moderate quarter-point interest-rate increase is likely.
As if Cisco weren’t enough to rattle investors, the May 16th Fed watch
exacerbated the already jittery market. While pundits are still mixed
whether investors should expect a half point rate hike or a more moderate
quarter point, last week’s strong economic data would seem to point to the
former.
internet.com’s Internet Stock Index was caught in the downdraft, slipping
4.35% on the day. While the NYSE ran in circles on light volume, easing
lower by 25.77 to 10,603.63. Tech stocks and Internets were hardest hit by
the Cisco factor, sending the Nasdaq plunging 147.44 to 3669.38.
Shares of Verio rocketed 22-3/8 to 58-5/16,
after Japanese telecomm and minority shareholder NTT Communications
announced it would buy the remaining 90 percent stake in the Web services
provider for roughly $5.5 billion in cash.
Networkers fell in sympathy with Cisco, as shares of Nortel Networks
took it on the chin, down 6-9/16 to 110-1/4. Alteon
WebSystems fell 5 to 62, while shares of Akamai
Technologies crumbled 10-7/16 to 86-5/8.
chinadotcom tacked on 2-15/16 following its
2-for-1 stock split effective today. Other foreign concerns posted solid
gains ahead of China-based Netease.com’s planned debut Thursday, as
shares of Sina.com climbed 1-13/16 to 31-9/16,
and Internet Initiative Japan added 4-3/16 to
64-1/8.
Cisco Kid Takes It on the Chin
