Cisco's fiscal 2Q earnings rise above Street views

Published on NewsOK Modified: February 13, 2013 at 5:21 pm •  Published: February 13, 2013
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SAN FRANCISCO (AP) — Cisco's latest quarterly report provided further evidence that spending on technology gear is rising modestly in most parts of the world, despite persisting concerns about a still-shaky economy.

The earnings announced Wednesday, covering the fiscal second quarter ending on Jan. 26, exceeded analyst projections for the world's largest maker of computer networking equipment.

Cisco Systems Inc.'s quarterly performances and forecasts are widely regarded as a way to assess the state of the technology industry.

That's because the San Jose, Calif., company cuts a broad swath while selling its routers, switches, software and services to corporate customers and government agencies around the world. In addition, Cisco's fiscal quarters end a month later than most other major technology companies, giving it additional time to assess economic conditions.

Cisco CEO John Chambers, who is respected by investors for being able to predict economic trends, said what he is hearing and seeing from customers is giving him a sense of "cautious optimism."

"We are starting to see a slow, steady upturn in terms of (the sales) pipeline," Chambers told analysts during a Wednesday conference call.

Even most of Europe's troubled economy appears to be recovering, Chambers said, though he expects the southern part of the continent to remain in terrible shape for an extended period. Demand in China is still weak, with product orders from that country declining 4 percent from the previous year. But Chambers is confident that market is going to recover quickly.

The unwieldy government deficits in the U.S. and Europe loom as Chambers' biggest worry. "I do believe governments have the potential to trip us up here," he said.

Reflecting the murky outlook, Cisco sought to ensure that the financial bar for its current quarter, which ends in April, remains relatively low.

Management projected revenue will increase 4 percent to 6 percent from last year, assuming a deal to sell its home-networking business closes on schedule next month. Cisco is selling that business, including the Linksys brand, to Belkin, a maker of smartphone cases and computing accessories.

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