Cisco Breaks the Bank
  04/16/2001 10:36:54 PM MDT Albuquerque, Nm
  By Dustin D. Brand; Owner AMO

Cisco once dominant, now in doom.   SAN JOSE, CALIF. - Cisco Systems Inc., the biggest maker of gear that helps to power the Internet, said on Monday that its third quarter pro forma earnings will miss analyst forecasts and that it will fire a total of 8,500 workers.

  Cisco has been hurt by increased competition into their Internet Router market share. Nortel Networks, Intel, 3Com, Alcatel, and others like LinkSys have cut into Cisco's market share, spreading it thin, real thin. Cisco routers are no longer the only solution needed to handle the intricate process of "routing" data traffic to and from computers. LinkSys, a market dominator in competitively priced Network Cards, released their own "Broadband" Internet Router with a built in hardware firewall. LinkSys quickly met with success selling this high quality router/firewall for $200. It is now their #1 selling product, exceeding all of their expectations. There are several other success stories like this one for other companies competing against Cisco, including Intel who now makes their own Routers.

  In my opinion, Cisco was prepared for this market shift with their own products, but instead of trying to compete, they tried to dominate and now they're in no sense dominating the market.

  This has caused Cisco, the once "super stock" to crumble from several stock splits and a huge payout to investors to trading in the teens with it's 52 week high at 71.875 and their 52 week low at 13.1875. Todays trading (04-16-01) closed at 17.20 or minus 4+%.

  "This may be the fastest any industry our size has ever decelerated, which has required us to make difficult business decisions at an unprecedented speed," said Cisco Chief Executive John Chambers in a statement.

  Clearly, with all the added competition, deceleration wasn't the end all cause of Cisco's decline.