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Cisco's gloomy forecast scares Wall Street
Thursday, February 07 2008
by The Register


Cisco has recorded a 7.2 percent rise in net income for its
second quarter but predicted a slowdown in sales for the rest
of the year due to economic uncertainty.

The world's largest network equipment maker said on Wednesday
that its second quarter net income reached USD2.1 billion, or
USD0.33 per share, compared to USD1.9 billion, or USD0.31 per
share, for the same three-month period a year ago.



Second quarter net sales were USD9.8 billion, a rise of 16.5
percent on the USD8.4 billion recorded for the same quarter
last year.



"Cisco delivered another solid quarter with strong revenue
and order growth driven by a broad base of geographies,
products, services and customer markets," said John
Chambers, chairman and CEO, Cisco. 



Net sales for the first six months of fiscal 2008 were
USD19.4 billion, compared with USD16.6 billion for the first
six months of fiscal 2007. Net income totaled USD4.3 billion
or USD0.68 per share, versus USD3.5 billion or USD0.56 per
share for the first six months of fiscal 2007.



However, while Cisco's latest results surpassed expectations,
its shares fell by more than 7 percent on Wall Street after
the firm warned that economic uncertainty was beginning to
impact on sales. Cisco said that it expected sales would rise
by just 10 percent during the third quarter, much lower than
previously anticipated. Nonetheless, the firm said it was
confident it could weather the storm. 



"As we enter the second half of the fiscal year, our
innovation pipeline is in excellent shape, our balanced
product momentum across core and advanced technologies
continues to be solid, and execution against our long-term
strategy remains unwavering," said Chambers.



"This constant evolution of moving into new markets and
product adjacencies, alongside our core operational and
financial strength, is the hallmark of Cisco's ability to act
upon key market transitions," he added.