Friday, February 08, 2008

Cisco: 'We're Talking Ourselves Into This Slowdown'

InternetNews Realtime IT News – Cisco: 'We're Talking Ourselves Into This Slowdown': "Quarter after quarter, year after year, Cisco Systems has been a bellwether for the IT industry. So when the networking giant sees trouble ahead, people take notice.

Helge: Long term investments in IT-infrastructure as an indicator.

During Cisco's Wednesday earnings call for its second fiscal quarter, CEO John Chambers announced solid results. However, the news was tempered by his warning that the company is seeing signs of a slowdown in its business.

Helge: The signs of slowdown.

For the quarter ending Jan. 26, Cisco said net income totaled $2.1 billion ($0.33 per share), a year-over-year gain of 7.2 percent compared to the same quarter last year. The networking vendor's net sales also rose to $9.8 billion, an increase of 16.5 percent over the second quarter of 2007.

Helge: Good numbers.

While those numbers looked rosy, Chambers grew cautious when providing guidance for the next quarter, thanks to what he described as a slowdown in sales during January.

Helge: They said "rosy" but sales slowdown in January 2008.

As a result, the company lowered its sales growth expectations to only 10 percent for the coming quarter. Chambers said Cisco is sticking with its long-term growth target of 12 to 17 percent, however.

Helge: Just a little slower...

The report sent Cisco's shares tumbling in early-morning trading on Thursday. What's to blame for the showdown? To Chambers, it's largely self-fulfilling: the fault of businesses believing hype about a slowdown. Consequently, he said."

Helge: Are we talking ourself into a slowdown?

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