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Cisco's roller coaster
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January 10, 2001: 5:32 p.m. ET
Pushed and pulled, shares of the computer network maker move in heavy trading
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NEW YORK (CNNfn) - Shares of Cisco Systems went on a wild ride Wednesday, with the stock falling as much as 9 percent before ending just modestly lower, as investors sifted through unnerving comments from an investment bank and Cisco's CEO.
Early in the day, a CIBC World Markets analyst said he expects networking equipment companies to have a poor year because telephone companies have built too much capacity.
In a possible threat to Cisco, the analyst, Steve Kamman, said insurgent networking companies with equipment designed for newer, upstart network operators eventually will dominate and outperform.
 "We believe Cisco will not meet consensus revenue estimates in fiscal 2002 and expect it will no longer be able to rely on appreciating stock as a currency," for acquisitions, he said. In an interview on CNNfn's Market Call, Kamman said that Cisco's stock price incorporates substantial optimism about future spending by telephone carriers. (217K WAV) (217K AIFF).
However, Kamman also believes that softness in 2001 presents a "tremendous buying opportunity in advance of a massive boom" in 2002-2003.
CIBC's Kamman started coverage of Cisco (CSCO: Research, Estimates) with a "hold" rating, saying that it is "not well positioned to meet an expected Tsunami of changes in the telecom market."
John Chambers, Cisco's chief executive, himself signaled to analysts at an investor conference Wednesday that Cisco's business in the fiscal second-quarter may cool with the slowing U.S. economy. The sharpest slide of the day coincided with Chamber's remarks.
"Chambers did say that the second quarter will be more challenging for the company," said Paul Sagawa, an analyst with Sanford Bernstein who attended the conference, which was sponsored by Morgan Stanley Dean Witter in Scottsdale, Ariz.
Sagawa said the company has slowed its hiring. He expects brokerage downgrades ahead.
 Cisco, after falling as low as $33.53, ended the day down only 88 cents at $36.25. More than 200 million shares changed hands, the second busiest trading session for a Nasdaq stock.
Lucent (LU: Research, Estimates) gained 81cents to $17.63, Nortel (NT: Research, Estimates) gained 31 cents to $31.94, and Juniper (JNPR: Research, Estimates) gained $2.13 to $119.31, after falling as low as $106.50.
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Redback (RBAK: Research, Estimates) jumped $5.44 to $40.88. Robertson Stephens analyst Paul Johnson upgraded the networking equipment maker to "strong buy" from "buy."
Intel gains, Celeritek plunges
Separately, chip maker Intel gained 75 cents to $34 even though a CS First Boston analyst raised concerns about price wars between Intel and AMD (AMD: Research, Estimates).
"We believe that the PC environment hasn't improved, and visibility still remains quite poor," CS First Boston analyst Charlie Glavin said. "We expect this trend to continue through the first half of 2001. As a result, we expect pricing pressure to continue between Intel and AMD through Labor Day, as weak end demand and inventory overhang continue to push both companies down the slippery slope of pricing as the only means of leverage."
In Wednesday afternoon trading, AMD rose 38 cents at $17.13.
But Celeritek (CLTK: Research, Estimates), a maker of gallium arsenide (GaAs) semiconductor components used in the transmission of voice, video and data over wireless communication networks, plunged after the company's fiscal third-quarter earnings missed Wall Street estimates.
Celeritek said net income rose to $2.6 million, or 21 cents per share, from a net loss of $3.1 million, or 42 cents per share, a year ago. That's below mean analyst expectation for the quarter was 23 cents per share, according to First Call.
Celeritek's stock plunged $14.06, or 45 percent, to $16.94.
Analysts unimpressed with Apple
Securities analysts were unimpressed with Apple's new product offerings unveiled on Tuesday at the Macworld Expo in San Francisco. Apple Computer remedied a key deficiency in its product line Tuesday by introducing faster Power Mac models with a drive that consumers can use to create their own CDs.
"While CEO Steve Jobs wowed the crowds as usual at Macworld Expo, we came away with the sense that Apple is very much in a transition mode, trying to fine-tune its strategy," said Bear Stearns analyst Andrew Neff. "While Apple introduced a new 733 MHz PowerMac and a thin/light PowerBook, most of these products are late and under-megahertzed relative to the Wintel world."
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Apple (AAPL: Research, Estimates) said Tuesday that its long-awaited OS X operating system will ship March 24, with a price tag of $129. Apple has shipped more than 100,000 copies of the public test version of OS X since its release in September and has received more than 75,000 individual user feedback entries from Mac users and developers worldwide.
"More importantly, we are rather surprised by the launch plan for Mac OS X," Neff said. "Apple plans to release the new OS into stores in March and then bundle onto systems in July -- which creates the potential of a lengthy stall by customers waiting for the new OS."
Similarly, Merrill Lynch's Steve Fortuna said he was less enthusiastic about Apple's near-term prospects based on what he saw at the event.
"Despite some interesting announcements and a solid display of exciting technology, we don't walk away with the sense that the near-to-medium term prospects for the company are any brighter than previously thought," Fortuna said in a note to clients Wednesday.
Apple's stock fell 63 cents to $16.56.
Enterprise software strong
Makers of software for corporate applications rose Wednesday, having been pounded for the past several weeks. CS First Boston analyst Brent Thill said that e-commerce software companies are nearing a trough and may turn upward.
"We forecast strong spending on software applications in calendar year 2001," Thill said in a research note. "But the priority stack has shifted towards supply chain/B2B collaboration and select areas of CRM/content management. We believe the heavy damage is already done. While we can't call the absolute bottom, we believe we are nearing the trough."
In afternoon trading, BEA Systems (BEAS: Research, Estimates) gained $7.13 at $56.25, Commerce One (CMRC: Research, Estimates) rose $2.50 $21.75, i2 Technologies (ITWO: Research, Estimates) advanced $6.31 to $48, and Veritas Software (VRTS: Research, Estimates) added $11.51 to $91.06.
One day after its stock fell sharply on a sales disappointment, Nokia (NOK: Research, Estimates) rose 25 cents to $39.56.
The German division of Lehman Brothers Wednesday reaffirmed Nokia stock as a "long-term outperformer." 
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