Older phone companies slowed their spending as well. Cisco's growth started to dip late last year, showing up in a string of weak daily sales reports. The bottom dropped out in the first few months of 2001. Cisco won't confirm that. Some investors have sued the company in recent days, saying that those financial arrangements fraudulently inflated Cisco's revenue at the cost of future business.
Cisco denies the allegations.
Parts in warehouses Analysts have criticized Cisco for its decision to warehouse the inventory it is writing off, mainly in facilities owned by its suppliers. We don't want to be in a position where we have to go out and repurchase inventory we have just destroyed,'' he said. Analysts also jumped on the possibility that Cisco could sneak the parts into products to be sold, reducing the apparent cost of the goods because the written-off parts would have no value on the company's books. Technically, accounting rules would allow Cisco to use the parts. But the company has said that if it does so it will make that public, so that investors could factor that in.