Cisco, one of the world’s biggest providers of Internet equipment, has been taking it on the chin financially, with the precipitous drop in Internet stocks the last several months. (At press time, Cisco’s stock was trading around $22, down about 69% from a 52-week high of $70). In March the company said it would ax up to 17% of its work force in the first series of job cuts in 17 years, a period marked by rapid growth.
Cisco President-CEO John Chambers recently said revenues in the second quarter could be flat or even fall as much as 10%. The Internet equipment maker posted a first-quarter loss of nearly $2.7 million, including a $2.2 billion charge to cover excess inventory that will most likely be scrapped.
"[Cisco] has a massive amount of inventory and, rather than write it off, they might have thought it would be better to barter for it," Rutstein said.
Recent reports said three of the nation’s largest mutual fund companies—FMR Corp., Janus Capital Corp. and Putnam Investments—led an exodus from Cisco in the first quarter, selling more than 250 million shares, or 3.5% of its outstanding shares.