Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Small (but rich!) telecom equipment maker Sycamore Networks (Nasdaq: SCMR) reported shrinking operating losses for fiscal Q1 2011 this morning, but a loss still bigger-than-expected. That's sparking a sell-off that's already swelled to 13%.

So what: Sycamore tried to soften the blow by offering a modest concession to its shareholders: a $6.50-per-share, one-time dividend payout. But even this wasn't enough to buy them support. Seeing sales drop 25% year-over-year, and a net loss nearly twice as big as last year's, it seems investors are less interested in dividends, than they are in seeing progress at the business.

Now what: Which I have to say, seems a bit strange. Historically, interest in Sycamore has hinged more on the fact that this $30 stock had nearly $20 per share in cash on its balance sheet. Sycamore was an asset play, plain and simple. The idea was that the stock had to be worth its $20 cash, minimum, and anything extra depended on whether the business would turn around.

Now that Sycamore's proven itself willing to part with its cash, investors are starting to reexamine the business. If all the cash goes away, what would Sycamore look like? A $10 stock, that's spent the last four years trying to figure out how to earn a profit, still can't do it, and has to compete with the likes of Cisco (Nasdaq: CSCO), Alcatel-Lucent (NYSE: ALU) and now, Hewlett-Packard (NYSE: HPQ) as well?

Gee whiz! No wonder investors are dropping the stock.

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The Fool has written calls (Bull Call Spread) on Cisco Systems , but Fool contributor Rich Smith does not have any position in any company named above. The Motley Fool has a disclosure policy.

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