Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Shares of Cisco sink 17% on outlook

By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- Cisco Systems Inc. reported a quarterly profit and sales Wednesday that beat Wall Street's forecasts, but a cautious outlook sent shares plummeting.

Shares of Cisco (CSCO, Fortune 500) fell 17% in early morning trading on Thursday.

On a conference call with analysts, Cisco CEO John Chambers said that Cisco expects its revenue will grow by only 3% to 5% in the current quarter, compared to last year. For 2011, the company expects sales growth of 9% to 12%.

Citing weakness in the company's set-top cable box, consumer and public sector businesses, the ever-cautious Chambers continued to call the economic environment "challenging." He also said that businesses' capital spending has slowed in recent months.

But he sees that that weakness as more of a blip than a long-term trend. He expects sales to pick up soon, with revenue growth returning to Cisco's typical 12% to 17% "in the not-to-distant future."

Still, the San Jose, Calif.-based company said its most recent quarter, the first of its fiscal year, was quite successful. Net income rose to $1.9 billion, or 34 cents per share, in the quarter ended Oct. 31. That's up 8% from a year earlier. The results included one-time charges of 8 cents per share; without the charges, Cisco earned 42 cents per share.

Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, expected earnings of 40 cents per share.

Sales rose 19% to $10.8 billion, edging past analysts' forecasts of $10.7 billion.

Cisco has lately found new rivals entering the networking scene, like Hewlett-Packard and IBM, which have added new services to become one-stop shops for technology customers. To keep up, Cisco is transitioning from the world's largest networking provider to a broader-based IT supplier, adding new consumer products to its lineup.

"We believe our vision of how the industry will evolve and strategy to lead this industry is gaining more momentum," Chambers said on the call. "Our ability to enter new markets, from cloud to video mobility to home, is gaining speed and scale." To top of page

Index Last Change % Change
Dow 16,643.01 -11.76 -0.07%
Nasdaq 4,828.33 15.62 0.32%
S&P 500 1,988.87 1.21 0.06%
Treasuries 2.19 0.02 0.83%
Data as of 7:57am ET
Company Price Change % Change
Freeport-McMoRan Inc... 10.50 0.31 3.04%
Bank of America Corp... 16.36 -0.08 -0.49%
Apple Inc 113.29 0.37 0.33%
Intel Corp 28.42 0.70 2.53%
Alcoa Inc 9.41 0.55 6.21%
Data as of Aug 28
Sponsors

Sections

No U.S. business went through bankruptcy more than Donald Trump's former casino empire during the last 30 years. Trump says there's nothing wrong with that. More

The U.S. economy has performed well this year. But there's lots of global gloom. Which will influence the Fed the most? More

The OnHub is fast and attractive, but its real power is an app that takes the pain out of managing a WiFi network More

How do you run a successful crowdfunding campaign? Indiegogo's CEO Slava Rubin offers his top tips and mistakes to avoid. More

Looking for something good on Netflix? These entertaining films will help you learn more about finance and investing. More