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Cisco CEO: 'Orders on track'
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December 4, 2001: 3:14 p.m. ET
John Chambers is cautiously optimistic at analyst meeting.
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NEW YORK (CNN/Money) - Shares of network equipment maker Cisco Systems rose Tuesday after its top executive said orders in November met expectations.
Speaking at the company's analyst conference in Santa Clara, Calif., Cisco CEO John Chambers said orders in November were "linear and on expectations."
He said the company's orders had been linear, which refers to the smoothness of incoming orders, since June. He also said the company is still having difficulty forecasting sales and demand beyond one or two quarters.
Chambers also claimed that the company is making more market share gains recently than it has at any other point in its history. However, he declined to comment on the company's current quarter, its fiscal second, which ends Jan. 26.
Jeffrey Lipton, an analyst at J.P. Morgan, said the tone of Chambers' comments for the near term was cautious, which is what he had expected. (476K WAV) or (476K AIFF)
"He made some very positive comments about the longer term, which is of course what we would expect John to do," Lipton said. "But in the near term, my sense is that he was fairly cautious."
Although the stock rose following the news, the rise was in parity with the broader tech sector.
The cautiously optimistic assessment by Chambers as he began a two-day conference gave a lift to shares of Cisco (CSCO: up $0.66 to $20.52, Research, Estimates). The stock has fallen more than 63 percent over the past year from a high of $55.75.
Still, at roughly $150.5 billion, Cisco's market capitalization far exceeds any of its competitors.
In an interview with CNNfn Tuesday evening, Chambers said it's up to the market to determine if Cisco's stock is fairly valued but emphasized Cisco's profitability and strong cash flow.
"What this industry is about is back to the basics in the new Internet economy; and the basics are profitability, cash flow, productivity and market-share gains," Chambers said.
"We're profitable and have the potential to be very profitable," Chambers added. "We generate cash from operations of over $1 billion per quarter. We have $19 billion in cash and equivalents in an industry that is in debt. We've gained more market share than we've ever gained in this last quarter. We've got the customer loyalty and strategy for where the industry's going, which is combining networks for service providers and enterprises. So I'm very optimistic about our future if we execute right."
Like most high-tech companies, Cisco's business has been hurt this year by a sharp slowdown in spending, particularly among service providers in the United States who, faced with a slowing and uncertain economy, have either deferred or canceled many of their new equipment orders.
For Cisco, the slowdown was especially pronounced, since the company has logged tremendous growth rates until recently.
In the current quarter, analysts on average expect the company to post a profit of 5 cents per share on roughly $4.5 billion in sales. That would be a sharp drop from a profit of 18 cents per share on $6.7 billion in revenue during the same quarter last year. 
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