MMC Networks Sees Negative Fallout From Cisco-IBM Deal

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MMC Networks (MMCN) said its fourth-quarter 1999 and fiscal 2000 estimates may take a hit from IBM's (IBM) - Get Report departure from the network switch/router business. Earlier today, IBM announced a pact with Cisco Systems (CSCO) - Get Report to supply network integration services to Cisco's customers. MMC investors, who grew concerned after IBM announced its new venture, began a selloff that would send the stock tumbling 40% in today's trading.

According to MMC, IBM represented 23% of its second-quarter earnings. The company, which said its fourth-quarter profits could now decline by 5% to 10%, initially estimated IBM's business to account for 15% of its fiscal 2000 revenue.

In other postclose news (earnings estimates from First Call; earnings reported on a diluted basis unless otherwise specified):

Earnings/revenue reports and previews

Comverse Technology

(CMVT)

posted second-quarter earnings of 52 cents a share, beating both the 12-analyst estimate of a 49-cent gain and the year-ago 36 cents.

CSK Auto

(CAO)

reported second-quarter earnings of 46 cents a share, beating both the eight-analyst estimate of 44 cents and the year-ago 33 cents.

Flowers Industries

(FLO) - Get Report

said it would scale down second-quarter results after revisions were made to accounts receivable figures of its

Mrs. Smith's Bakeries

subsidiary. The company, which holds a 55% stake in

Keebler

(KBL)

foods, said it altered its second-quarter results to a loss of $2.9 million, or 3 cents per diluted share before a non-recurring charge at Keebler from posted revenue of $9.8 million, or 10 cents per diluted share, prior to the Keebler charge. Year-ago figures were unavailable. Flowers said the adjustment includes higher reserves for customer deductions that were once considered collectible and trade promotions.

Petsmart

(PETM)

posted second-quarter earnings of 5 cents a share, missing the seven-analyst estimate by a penny but beating the year-ago 2 cents.

Mergers, acquisitions and joint ventures

Staff Leasing

(STFF)

said it has turned down a $380 million buyout proposal from its largest institutional shareholder and would consider strategic alternatives, including the sale of the company. Staff Leasing said the bidder, a subsidiary of

Paribas

, along with other interested acquirers could examine its books and operations in due diligence investigations but must sign confidentiality agreements. The company said that it had completed a joint program with compensation carrier

CNA

and the

Texas Workers Compensation Insurance Fund

to offer workers compensation assistance to clients. Staff Leasing said it declined Paribas's offer to avoid disruptions in obtaining offers for workers' compensation insurance and starting up Internet payroll software.

Miscellany

Daimler Chrysler

(DCX)

said it would spend $624 million to build up its engine plant in Kenosha, Wis., aiming to modernize its U.S. engine businesses. Daimler Chrysler said construction is set to begin on the facility this fall, adding a fourth engine line to the plant. The company said that its addition to the plant, which currently employs 2,000, would create 50 to 100 jobs. The facility serves as a production site for engines found in Jeep Grand Cherokee, Cherokee, Wrangler sport utility vehicles and Dodge Dakota pick-up trucks.