In these days of public outcry over the bankruptcy of Enron and insider trading, Cisco Systems had to acknowledge a bit of embarrassing insider news itself this morning.

The company (NASDQ: CSCO) moved quickly today to disclose the fact that what it acknowledged was ‘a larger number’ of employees received advance information on Tuesday about strong sales figures which were not to be disclosed until after financial markets closed today.

An email intended for close distribution to senior Cisco executives was sent to a much broader list of employees, the company said.

A statement was sent out at 8 a.m. EST alerting the public and Wall Street about the gaff, said Joe Freddoso, a spokesman for Cisco’s campus in Research Triangle Park.

“We have to notify the public of any information that was disclosed before trading commences,” Freddoso said. “I imagine we’ll get one or two questions from analysts about that today.”

An analyst told Reuters News Service that most experts already had expected Cisco to announce a strong quarter.

Cisco was to announce stronger than expected sales and earnings report in a conference call this afternoon after Wall Street closes. The memo disclosed that orders for the quarter were $3.9 billion, up from the expected total of $3.75 billion, but the company said specific revenues and earnings information wasn’t included in the email.

Cisco stock was barely affected by the good news, closing up less than 1 percent at $18.61, or 11 cents. It had been up more than $1 in before hours trading. Cisco stock fell to a low of $11.04 following the 9-11 terrorist attacks but has climbed steadily back, especially after a good earnings report the previous quarter. Cisco closed at $18.50 on Tuesday, up 19 cents.

The company already has investigated what happened with the email, Freddoso says. “It was a very honest mistake,” he explains. “An email was sent to an alias rather than to an individual name, and the alias list included a lot of people.”

According to Freddoso, the senior executives who had access to the sales information are designated as company “insiders”, and their “trading rights are regulated.”

Securities and Exchange Commission rules require that any information shared to a broader group within the company also be distributed to the public, Freddoso adds. “We don’t have to do anything other than make that same information public,” he says.

The complete statement from Cisco, as published on its Web site, follows:

Statement from Cisco Systems

SAN JOSE, Calif., February 6, 2002 – Cisco Systems, Inc. today announced that an internal communication from a Cisco executive characterizing Cisco’s Q2 FY 2002 financial results in positive terms was prematurely and inadvertently distributed to a large number of Cisco employees after close of market on February 5. The communication also said that Cisco’s booked orders, for products only, were $3.9 billion versus an internal goal of $3.75 billion for the quarter. The memo did not include specific information about revenues or earnings for the quarter.
“As previously scheduled, we will release financial results for the quarter after the close of the market today. So as to minimize any potential confusion, the results we announce this afternoon will exceed the current consensus estimates of earnings per share and revenues for the second quarter of our fiscal year,” said Cisco Chief Financial Officer Larry Carter. “We felt it was necessary to disclose this information publicly, given the broad internal distribution of the communication. Investors are urged to listen to our conference call scheduled for 1:45 PM (PST) today for further detail on this quarter’s performance.”