Cisco (NasdaqGS: CSCO) shares were active in Wednesday’s premarket with a fractional loss as a closely watched Nasdaq exchange traded fund was set for a mixed open.
Cisco was off 0.6% while PowerShares QQQ (NasdaqGM: QQQ) was little changed before the bell.
The Nasdaq ETF has been bouncing around its 50-day moving average lately, while Cisco shares have been trending lower. Cisco represents 3.5% of PowerShares QQQ.
Cisco earlier this month announced a reorganization of its business structure and operations. The company said its fiscal third-quarter earnings fell about 18% and expects the current quarter will continue to show weakness.
“Weak third-quarter results have triggered a crisis, following the poor financial performance in the last few years,” Indigo Equity Research said in a recent profile of Cisco.
The analysts noted gross and operating margins have fallen since 2004, while revenue and earnings per share are at the same levels as in 2008.
“This is mainly due to its end markets maturing, competition increasing (from Asian manufacturers and other IT companies) and loss of market share in its core products (switches and routers); as well as the recent recession,” they wrote. “A new strategy is being adopted, but this is a large company and a turnaround will probably take over a year.”
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