IT looks like the networking giant Cisco is not doing as well as many thought.
Wall Street analysts were apparently shocked at the company’s latest results which showed the Internet networking king suffering a bit too much.
Many investors hoped that Cisco would announce some good news and prove that technology spending was on the rise.
But it looks like forecasts for quarterly and yearly revenue fell far short of Wall Street’s expectations.
The problem is people tend to have high expectations of Cisco. Wall Street likes its solid management and it should have been doing well thanks to the surge in global wireless and Internet traffic.
According to Reuters, Cisco’s John Chambers muttered darkly about “short-term challenges” in Europe and public sector spending, as well as weakness among its most important customer segment: service providers.
He told analysts in a conference call that he was just as disappointed as Wall Street.
“We are obviously not projecting growth as fast as we would like over the next several quarters,” he said.
He is predicting growth of nine to 12 percent in fiscal 2011, well below the 13.1 percent analysts had expected on average.
Chambers warned of a three to five percent revenue growth in the current financial period. Wall Street expected 13 percent.
With Cisco predicting doom, the news caused share prices in Microsoft, Oracle and Intel to take a tumble too. After all if Cisco still thinks things are bad, then the rest of them do too, only they have just not told us.
Chambers blamed slow orders from public sector clients and service providers and weakness in Europe, and analysts do not think that means that the entire industry has gone down the loo.
Cisco’s main clients are public sector and they are all worried about saving money at the moment.