Networking Stocks Slide as Researcher Adds to Slowdown Talk

A new telecommunications spending report rebuffs Chicken Little but supports the emerging view that growth has peaked.

Though the sky isn't falling, it is no longer the limit for these stocks. The report -- released Monday by RHK, a leading market research firm -- confirms what some in the industry have been saying for two months: Equipment buyers are feeling a chill, fueling fears of a flu epidemic across the equipment-selling sector.

The repercussions of this view and a negative report from Lehman Brothers were apparent in the market Monday. Cisco (CSCO Quote) fell $4.93, or 9%, to $45.62, while Sycamore(SCMR Quote) dropped $7, or 10%, to $58.50 and Redback (RBAK Quote) dropped $12.50, or nearly 11%, to $101.50. The selloff comes after a week in which many of the sector's big stocks lost as much as a quarter of their value following a revenue shortfall at Nortel (NT Quote).

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