Cisco Systems profit in quarter beat estimates; sales rose 35%

Article Abstract:

Cisco Systems offset its the Asian market weakness by announcing net income of $492 million, or 45 cents a diluted share, for the 4th qtr 1998 ended Jul 25, 1998. By comparison, the computer-networking gear manufacturer reported $151 million, or 14 cents a diluted share, for the 4th qtr 1997. The company's operating income amounted to $523 million, or 48 cents a share, excluding a one-time acquisition-related expense. A First Call consensus of investors had predicted Cisco's per-share operating income to reach 47 cents. Net sales, meanwhile, jumped 35% from $1.76 billion in the 4th qtr 1997 to $2.39 billion in the 4th qtr 1998. The successful quarter stems from Cisco's steady performance, which featured a significantly faster industry growth rate and continued gross margins at around 65%. Cisco also announced its seventh stock split since 1990, a 3-for-2 split effective Aug 14, 1998.

Finance, Company sales/revenue, Company sales and earnings, Company earnings/profit

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Nortel agrees to acquire Bay Networks; telecom company to swap $7.68 billion of its stock for network-gear firm

Article Abstract:

Northern Telecom (Nortel) acquired data networking equipment vendor Bay Networks for $7.68 billion in stock, valued at $32.40 a share. Financial terms call for Nortel to pay 0.60 common share for each of Bay's 237 million common shares, including options. The deal could trigger further consolidation among industry heavyweights that are racing to develop full services for customers in managing voice, video and data traffic. Nortel's move has drawn criticism from observers despite its gain with corporate customers and potential sales expansion to telephone and Internet-access companies. Some analysts and investors say Nortel overspent on a struggling Bay that lost $144.2 million, or 66 cents a share, in the 3rd qtr 1998. Other believe that Nortel has erred by challenging the cutthroat corporate data-networking business, as the public-carrier sector appears to have grown.

Mergers, acquisitions and divestments, Company acquisition/merger, NT, Northern Telecom Ltd., Bay Networks Inc., BAY

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FTC targets Cisco Systems in antitrust inquiry

Article Abstract:

The Federal Trade Commission (FTC) is investigating Cisco Systems, looking for possible violations of antitrust laws. The investigation focuses on talks about the possibility of a partnership that were held with Lucent Technologies and Northern Telecom in 1997. Lucent makes computer-networking equipment, and Lucent and Northern Telecom make telephone gear, and the FTC's concern involves the market for voice-data networking 'convergence,' in which the three companies compete. Cisco made no secret of its talks, which apparently produced no results, and characterizes the FTC's investigation as 'routine.' Even so, news of the investigation, taken together with an analyst's downgrade from 'Strong Buy' to 'Buy,' caused Cisco's stock to drop 13% on Oct 5, 1998. The stock closed at $48.3125, off $7.4375.

Investigations, Antitrust law, United States. Federal Trade Commission, Investigation, Antitrust Issue

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