Cisco's fourth-quarter earnings plunged 99 percent, meeting Wall Street's expectations, the networking giant said Tuesday.
For the three months ended July 28, Cisco (CSCO) earned $7 million, barely breaking even, compared with profits of $796 million, or 11 cents a share, in the same period last year.
Excluding items and goodwill, the company earned $163 million, or 2 cents a share, compared with $1.2 billion, or 16 cents a share, in the same period last year.
Revenue for the fourth quarter was $4.30 billion, a 25 percent decrease from the $5.72 billion in the same period last year but on par with analyst expectations.
- - -
Happy bankruptcy: Covad Communications said Tuesday it plans to file for bankruptcy protection as part of a deal with bondholders that would wipe out $1.4 billion in debt.
Covad’s Chapter 11 bankruptcy is not expected to affect operations or any of its 330,000 subscribers, said Charles Hoffman, president and chief executive officer.
The prenegotiated bankruptcy will only affect bondholders and is designed to make the company more attractive to investors, he said. "Basically, we'll be a debt-free company," Hoffman said. "For potential investors, here's a company that's growing nicely and cutting expenses. It's quite an attractive investment."
Covad (COVD) officials described their planned filing as good news. "We're a lot larger, with a lot more cash and great partners throughout the country," Hoffman said. "The other key factor is we did this well in advance of hitting a wall."
Bondholders would exchange their bonds for a combination of cash and preferred stock. The cash portion would consist of 19 cents on the dollar for the value of both high-yield and convertible bonds. The preferred stock would represent about 15 percent of all the company's shares.
- - -
Exclusivity rights: McAfee.com has won a patent for its system of delivering security-related software and services over the Internet, giving it a potential leg up in the emerging trend of subscription-based software.
The patent, issued July 24 by the U.S. Patent Office, covers the technology behind McAfee's system, what co-inventor Srivats Sampath calls the company's "secret sauce," as well as its subscription-based business model, the company said Monday. McAfee applied for the patent in 1998.
"The future of software is really going to be delivered as Web services and we have a component of that," said Sampath, McAfee's president and chief executive officer. "The patent is a way to protect our investment."
"This doesn't close the door for competitors, it simply sets some boundaries for them," said Harry Fenik, chief executive officer of the Sageza Group, a market research firm.
Now, any company or so-called application service provider looking to offer subscription- and Web-based software specifically in the security and PC-management arena "will have to tread carefully" to not infringe on McAfee's patent, or decide to pay McAfee licensing fees, Fenik said.
- - -
We don't want your money: NextWave Telecom's plan to build a wireless communications network of the future will have to wait, at least until it can settle a present-day fight with federal regulators.
NextWave, which is operating under bankruptcy protection, said Monday it had secured the financing to pay more than $4 billion it owes the government for valuable communications licenses.
But the FCC made clear it is not interested, saying it will ask the Supreme Court to confirm its right to to revoke the licenses from NextWave and re-auction them.
"It is vital that bankruptcy not be used to game the system, as a safe harbor to negotiate with the FCC over the price or to warehouse spectrum pending the outcome of bankruptcy proceedings," the FCC said in its motion.
- - -
Land rush: EBay has acquired HomesDirect.com, a real estate site that lists and sells foreclosed property.
"This will be a new area for eBay," company spokesman Kevin Pursglove said. "EBay has a real estate category right now, but it's the first time foreclosed properties will appear on eBay in any significant numbers."
"HomesDirect is clearly one of the premier players in the area of foreclosed properties. What eBay brings to the table is the most active marketplace," Pursglove said.
EBay (EBAY) plans to keep HomesDirect as a separate website, but it will provide links to the foreclosure listings from eBay's real-estate category.
- - -
Bad timing: Samsung SDI's plan to raise about $526 million by selling shares in one of Malaysia's biggest initial public offerings this year has reportedly been delayed by the weak stock market.
"It's on hold at the moment because the market is not very good," a Samsung SDI official told Dow Jones Newswires.
Samsung SDI had originally targeted a listing on the main board of the Kuala Lumpur Stock Exchange in the first half of 2001 and received approval from the Securities Commission in January.
Reuters and AP contributed to this report.
