Cisco Shrugs Off Nortel's Shift; CEO Eyeing Start-Ups

In reporting first-quarter earnings that beat expectations by a penny a share, Cisco Systems Inc. shrugged off Y2K concerns and rival Nortel Networks Corp.'s announcement Nov. 9 of its router hardware fire sale and new routing software. Cisco said competition from start-ups is what it takes most seriously. Nortel had acknowledged that the announcement of its new routing software and price cuts on its hardware was timed to take the thunder out of Cisco's earnings announcement, but Cisco Executive Vice president Don Listwin cut the legs off of Nortel. "Nortel's price cuts signal its exit from the router business, and I for one am glad," Listwin said in an earnings conference call with analysts after the markets closed Nov. 9. Cisco President and Chief Executive John Chambers acknowledged that "we're watching Nortel closer than we used to," but said, "we expect the toughest competition from start-ups. Rapid flow of capital to start-ups is accelerating."