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Light Reading Index Hits a New Low

Light Reading Index continues its tumble

December 20, 2000

2 Min Read
Light Reading Index Hits a New Low

How low can you go? The Light Reading Index found out today, hitting655.46, down 77.30 from yesterday’s close. That is the lowest it's gonesince its creation on January 1, 2000.

Leading the descent was Foundry NetworksInc.'s (Nasdaq: FDRY) 59.59 percent fall to $18.25, prompted by an earnings warning (seeFoundry Slammed After Warning). Foundry traded as high as $212 in early March of this year.

Earlier in the day Foundry and ExtremeNetworks were downgraded from Buy to Neutral by SGCowen. Yesterday, Needham & Co. had the dubious foresight to upgrade Foundry to a Buy. Today, they weren't deterred by the 60 percent drop -- they upgraded it again to Strong Buy because they now consider the stock even more of a bargain.

Cisco Systems Inc. (Nasdaq:CSCO), the largest member of the LR Index, also hit a 52-week low, tradingdown $5.25 to $36.50 due to a downgrade by Merrill Lynch (see Merrill Analyst Clarifies Cisco Call). Cisco had traded as high as 82 in earlyMarch. It was the day’s most active issue on the exchange, with 115million shares changing hands; the next most active was Sun Microsystems Inc. (Nasdaq: SUNW) at 86 million shares.

According to a Wall StreetJournal report, AT&T AT&T Corp. (NYSE: T) may slashits dividends to 20 cents a share from 88 cents. If it does so, it would be the first time AT&T ever madesuch a cut. AT&T shares traded down $1 at $19.56. This points to moreevidence that carriers are hurting and might slow down their purchasing ofnew equipment. However, it is not clear that spending on fiber opticequipment -- which serves to improve the efficiency of acarrier's network -- is slowing. As Greg Konezny, an analyst at Piper Jaffray says,“The optical side is not getting cut as much, if at all.”

Other big losers today were Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7), down 17.81 percent to 18.75; Corvis Corp. (Nasdaq: CORV), down 19.13 percent to $20.88; Extreme Networks Inc. (Nasdaq: EXTR), down 35.14 percent to $31.50; Harmonic Inc. (Nasdaq: HLIT), down 15.22 percent to $7.22; MRV Communications Inc. (Nasdaq: MRVC), down 20.09 percent to $11.69; Redback Networks Inc. (Nasdaq: RBAK), down 17 percent to $46.38; and Sycamore Networks Inc. (Nasdaq: SCMR), down 16.74 percent to $33.25.

-- Matt Malina, research associate, Light Reading http://www.lightreading.com

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