Ventro reported $0 revenue for its fourth quarter of 2000. Yes, zero - a figure that pretty well encapsulates the spectacular decline of the business-to-business marketplace player whose shares hit a high of $243.50 in February 2000 but fell to less than $2 within the year.

It's easy to conclude that zero revenue equals an unhealthy company, and Ventro will likely never earn its way onto our Network World 200 list of the top public network companies.

But not all financial reports are so easy to dissect. Annual and quarterly securities filings, known as 10-Ks and 10-Qs, respectively, are filled with mind-numbing figures and grandiose statements that often obscure the most interesting content. Once in a while you'll find a real nugget, such as the fact that a company is saddled with insolvent customers or overwhelmed with inventory. But you have to know where to look.

For starters, consider more than just year-over-year revenue growth. Sequential quarterly growth can sometimes give a more accurate glimpse of current market conditions. Cisco sales grew 55% between the second quarters of 2000 and 2001. At that rigorous growth rate, the company would seemingly be insulated from the economic slowdown crushing so many network vendors. Yet Cisco fell short of earnings expectations for fiscal second-quarter 2001 by a penny - its first miss in more than six years - and instituted layoffs as one result.

So what gives? Read between the lines and you'll see that one of Cisco's problems is its 3.5% revenue growth between its first ($6.52 billion) and second ($6.75 billion) quarters of fiscal 2001. That's quite a hit for a company that posted 14%, 16.3% and 13.1% revenue growth in the three prior quarters. In fact, sequential revenue growth hadn't dipped below 9% since the first quarter of 1999.

Clearly, Cisco can't sustain the double-digit earnings growth we've come to expect if it can't pull revenue growth out of the single digits. But that's not going to happen any time soon. Last week, Cisco warned it expects third-quarter revenue to be down about 30% from second-quarter revenue.

What's on the shelves?

Inventory, too, can tell an interesting story. While Cisco's revenue grew 3.5%, inventory levels grew 29% between its first and second quarters of 2001. These aren't percentages investors want to see, as the numbers suggest Cisco isn't selling equipment as quickly as expected - a suspicion confirmed last week when Cisco said it will take a $2.5 billion charge for excess inventory.

Last fall, Nortel Networks found itself similarly stuck with rising inventory. Nortel's third-quarter 2000 revenue fell 7% from the second quarter, but inventory went up 21%. Nortel has since reversed the imbalance. Financial statements released in January show Nortel's fourth-quarter 2000 revenue up 21% from the third quarter and inventory up 7%.

But Nortel is by no means out of the woods. In January, the company briefly allayed investors' fears, saying for fiscal 2001 it still expected to hit 30% growth in revenue and operating earnings from the year-ago period. Then in February, Nortel

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