Cisco (CSCO) And EDS (EDS) Take Big Tech Down

By Douglas A. McIntyre Published Feb 7, 5:34AM EST

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Cisco (NASD: CSCO) and EDS (NYSE: EDS) have businesses which point different directions on a compass. But, it is the same compass. In one day, Cisco was able to show that large capex tech spending was slowing while EDS said that the consulting business aimed at data center out-sourcing was in the dumps.

To put a point on it, the whirlpool of falling tech earnings is pulling in almost every company in the sector. Reason did not prevail among those who hoped that large companies would continue to put money into next-generation upgrades of existing hardware and software. That puts the need for consulting services well out of consideration for most firms.

Cisco’s numbers probably point to a drop in the rate at which cable, telecom, and cellular providers are willing to upgrade their broadband networks. That is likely to cascade into slower sales for set-top, handset, and fiber vendors. It is a rolling snowball from Hell.

Cisco’s shares are down 30% over the last three months. Citigroup’s (NYSE: C) are down only 20%. Over that same period, EDS shares are down more than JP Morgan’s (NYSE: JPM).

Assuming that big tech stocks could fall more than big financial company shares in 2008 is not so far-fetched.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.