Cisco, Rivals Confront the Commodity Crunch

Outfits such as Lucent (LU) and Nortel (NT), which are still wed to their conventional-phone gear sales, have a great deal at stake in this transition. To try to keep up, both companies have shed numerous product lines and vowed to focus more closely on the types of equipment their big phone company customers are asking for.

But it might be too late.

"I see Lucent getting left behind," says Blaylock's Lowy, who has a hold rating on the stock. Others like Tellabs also fall into the legacy group that the others are breaking away from, says Lowy, who has no rating on Tellabs.

The companies breaking away in tech's second wave, according to Lowy, are Dell, Nortel and Web switch maker F5 Networks (FFIV). All are rated a buy by Lowy.

As for Cisco, the company managed to increase its market share and image after the bust. The big question now, says Cimi Corp. analyst Tom Nolle, is what's going to happen beyond next year. 3Com and Huawei will start growing much faster than Cisco in 2005, he says.

"This new distributed computing framework could offer Cisco a chance to create some feature differentiation," says Nolle. But "if they don't find it, their distribution channels are ripe for others to come in who can offer a better margin."

	1.	Cisco, Rivals Confront the Commodity Crunch
	2.	Options Reform Faces Roadblocks
	3.	IPO Outlook: Googly Eyed in 2004
	4.	2004: Software's Turn to Shine
	5.	Hedge Fund Craze Unlikely to Ebb
	6.	SEC: Second Fiddle, Out of Tune
	7.	Airlines Taxi Toward Profitability
	8.	Markets Can Still Cash In on Government Help
	9.	Economy Sobers Up, but Hangover Lingers
	10.	Market Rally Still Has Legs
	11.	Asset Allocation Done Right
	12.	The Five Biggest Scandals of 2003
	13.	Sound, Fury but No Inflation

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