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Cisco's Woes Hurt Power-One's Earnings

February 20, 2001

Power-One Inc. in Camarillo reduced its earnings forecasts for the year, mainly because Cisco Systems, its biggest customer, is buying less of its power-supply equipment.

Power-One said inventory of its products had built up throughout Cisco's supply chain, cutting future demand. Inventory reductions at other suppliers of communications equipment are adding to the problem, the company said.

The company said it expects revenue growth of 35% to 40% this year, substantially less than the 55% to 60% increase it had forecast.

Earnings per share will be $1 to $1.05, well below the $1.35 per share that Wall Street analysts had predicted.

Power-One makes power-conversion products, such as AC/DC converters, designed mainly for use in telecommunication equipment. More than 60% of its sales are to equipment manufacturers, and Cisco accounts for roughly 16% of its sales.

The reduction in demand has forced Power-One to move ahead with some cost-cutting plans it had delayed implementing in 2000, including moving production from plants in North America and Europe to lower-cost areas.

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