Light Reading Index Hits a New Low
Leading the descent was Foundry Networks Inc.'s (Nasdaq: FDRY) 59.59 percent fall to $18.25, prompted by an earnings warning (see Foundry Slammed After Warning). Foundry traded as high as $212 in early March of this year.
Earlier in the day Foundry and Extreme Networks were downgraded from Buy to Neutral by SG Cowen. 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, trading down $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 early March. It was the day’s most active issue on the exchange, with 115 million shares changing hands; the next most active was Sun Microsystems Inc. (Nasdaq: SUNW) at 86 million shares.
According to a Wall Street Journal report, AT&T AT&T Corp. (NYSE: T) may slash its dividends to 20 cents a share from 88 cents. If it does so, it would be the first time AT&T ever made such a cut. AT&T shares traded down $1 at $19.56. This points to more evidence that carriers are hurting and might slow down their purchasing of new equipment. However, it is not clear that spending on fiber optic equipment -- which serves to improve the efficiency of a carrier'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