Cisco Sneezes, Data Center Sector Catches Cold

Analyst concerns that Cisco Systems (CSCO) is seeing slow demand from enterprise IT customers whacked the tech sector in Wednesday’s trading on Wall Street, with data center stocks showing steeper declines than the broader market. Shares of Cisco were off 5.7 percent as analyst Mark Sue from RBC Capital cut his price target for the company’s shares, citing a slower recovery in enterprise hardware spending.

The Dow ended Wednesday’s session off 236 points (2.1 percent), while the NASDAQ index dropped 59.6 points (2.6 percent). But losses were steeper for a number of prominent data center stocks:

  • Terremark (TMRK) saw a drop of 8.7 percent as its shares fell 51 cents to $5.37.
  • Digital Realty Trust (DLR) shares fell $3.44 to $38.73, a decline of 8.2 percent on the day.
  • Rackable (RACK) slipped 6.3 percent, closing 82 cents lower at $12.17.
  • Shares of VMware (VMW), which lost a quarter of their value on Tuesday after the abrupt ouster of CEO Diane Greene, slid another 6.2 percent Wednesday. VMW shares finished at $37.71, down $2.48.
  • Content delivery provider Limelight Networks (LLNW) declined 23 cents to $3.50, down 6.2 percent for the session.
  • Savvis (SVVS) closed 5.2 percent lower, giving up 64 cents to $11.62.

Bucking the trend was Navisite (NAVI), which gained 27 cents to $3.83, a gain of 7.6 percent for the day. There was no visible news to explain the improvement.

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.