Class Action Suit Filed Against Cisco Systems by Wechsler Harwood Halebian & Feffer

Wechsler Harwood Halebian & Feffer LLP today announced that a class action has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of Cisco Systems, Inc. ("Cisco") (NASDAQ: CSCO)(NASDAQ: -)(NASDAQ: news) common stock during the period between August 10, 1999 and February 6, 2001 (the "Class Period").

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from April 20, 2001. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel.

The complaint charges Cisco and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Cisco and its subsidiaries are engaged in selling products for networking for the Internet. The complaint alleges that by the beginning of the Class Period in 8/99, Internet Service Providers and competitive local telephone companies had technology to deploy but little capital, and Cisco used this as an opportunity to increase its sales by providing capital financing to such companies but making such financing conditional upon the purchase of large amounts of Cisco product. Through this alleged manipulation and the shipment of defective or incomplete products, as well as Cisco's failure to adequately accrue for excess and overvalued inventory and uncollectible finance receivables, Cisco was able to report "record" earnings each quarter during the Class Period. Defendants thus made positive but false statements about Cisco's products, financial results and business during the Class Period. As a result, Cisco's stock traded as high as $82.

The inflation in Cisco's stock price was essential to its main corporate strategy, that of growth through acquisition, which Cisco accomplished through the exchange of inflated Cisco shares. In addition, each of the defendants had the motive and the opportunity to perpetrate the fraudulent scheme and course of business described herein in order to sell $595 million worth of their own Cisco shares at prices as high as $80.24 per share, or 84% higher than the price to which Cisco shares dropped after the end of the Class Period, as the true state of Cisco's business and prospects began to reach the market.

After completing more than 20 major acquisitions between 9/99 and 2/01, by issuing more than 400 million shares of Cisco stock, and selling more than 10 million shares of their personal Cisco holdings, on 2/6/01, Cisco announced extremely disappointing 2ndQ F01 results, including EPS of only $0.18. This disclosure shocked the market, causing Cisco's stock to decline to less than $30 per share before closing at $31-1/16 per share on 2/7/01, on record volume of more than 279 million shares, inflicting billions of dollars of damage on plaintiff and the Class. Cisco later admitted that 3rdQ F01 sales would be less than $4.8 billion, or lower than any quarter since the 2ndQ F00. Defendants' misconduct has wiped out over $400 billion in market capitalization as Cisco stock has fallen 84% from its Class Period high of $82 per share as the truth about Cisco, its operations and prospects began to reach the market. On 4/16/01, Cisco announced a $2.5 billion write-down of inventory (or 90% of its inventory as of 1/31/01) of components in its service business. This was one of the largest inventory write-downs in U.S. history. Cisco stock has dropped to as low as $13-3/16.

Plaintiff seeks to recover damages on behalf of all purchasers of Cisco common stock during the Class Period (the "Class").

If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following:

  Wechsler Harwood Halebian & Feffer LLP
  488 Madison Avenue 8th Floor
  New York, NY 10022
  Phone: 877-935-7400 (Toll Free)
  Ramon Pinon IV, Shareholder Relations Department:  rpinoniv@whhf.com

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SOURCE: Wechsler Harwood Halebian & Feffer LLP

Contact: Ramon Pinon IV, Shareholder Relations Department of Wechsler
Harwood Halebian & Feffer LLP, 877-935-7400, rpinoniv@whhf.com

Website: http://www.whhf.com/