Earnings Reports for Feb. 5 & 6

Cisco Misses Expectations for the First Time

Computer networking giant Cisco Systems said today its fiscal 2001 second-quarter earnings rose 48 percent but missed Wall Street's earnings expectations for the first time in several years as the company sounded a note of caution about the economy.

"Cisco missed both on revenue and earnings," said Chuck Hill, research director at First Call/Thomson Financial. The company had repeatedly beat Wall Street estimates by a penny a share.

The San Jose, Calif.-based company said its profit before one-time items rose to $1.33 billion, or 18 cents a share, for its fiscal second quarter ended Jan. 27, from $897 million, or 12 cents a share, in the year-ago quarter. Analysts had on average expected Cisco to report pro forma earnings of 19 cents a share, according to First Call/Thomson Financial.

Sales, which had been widely watched for a slowdown, rose 55 percent to $6.75 billion from $4.36 billion in 2000, falling short of Wall Street's expectations for $7 billion to $7.2 billion.

Cisco, which makes an estimated 70 percent of the world's routers that direct traffic on the Internet, also said it is "cautious" about the market pause.

"While we remain cautious about the implications of a brief pause in the current 10-year expansion of the U.S. economy, we believe that Cisco has never been better positioned to help our customers solve their two most important business issues: increasing productivity and creating new sources of revenue," Cisco Chief Executive John Chambers said in a statement.

"We remain confident about the market opportunity ahead of us over the next three to five years," he added. "This confidence is based on the continued impact of the Internet on productivity, and just how much more work needs to be done before every company is an e-company and a majority of the world's countries are e-countries.

Chambers warned less than two weeks ago that January's business was "more challenging than we anticipated," leading many analysts to question whether Cisco's and the telecommunications industry's growth are slowing.

In after-hours trading, Cisco's stock fell to $34-3/8 on Instinet after closing at $35-3/4, up $1-3/16, or 3.44 percent, on Nasdaq. In the past year, the Internet equipment infrastructure company's stock has underperformed the Nasdaq 100 Index by almost 6 percent.

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Disney Earnings Helped by Theme Parks

Walt Disney, (Disney is the parent company of ABCNEWS.com) reported today a higher than expected rise in fiscal first-quarter earnings before one time charges, with improvements in its theme park business, films and its hit show Who Wants To Be A Millionaire offsetting weaker advertising sales in its broadcasting business and losses in its Internet Group.

The Burbank, Calif., company, which owns a film studio, the ABC and ESPN television networks and several theme parks, reported a profit of $341 million, or 16 cents a share, for the three months ended Dec. 31, compared with $278 million, or 13 cents a share, a year earlier. The results exclude one-time charges and assume the same portfolio of assets in both periods.

The Wall Street consensus estimate compiled by research firm First Call/Thomson Financial was a profit of 15 cents a share before charges.

Excluding losses of $228 million from its stake in the Disney Internet Group, the company reported a profit of $594 million, or 28 cents a share.

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