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Cisco CEO affirms bad news
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March 13, 2001: 8:38 p.m. ET
Chambers says company got "hit hard" but does not lower guidance
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NEW YORK (CNNfn) - Cisco Systems Inc. CEO John T. Chambers on Tuesday reiterated statements about the company's financial outlook made last week when the networking giant announced layoffs, but warned of slack demand in the weakening Asian economy.
Chambers told investors at the Merrill Lynch Global Communications Conference here that conditions haven't improved from the sharp downturn Cisco experienced in January and said the near-term outlook is still grim.
 However, Chambers didn't officially lower his company's forecasts as he did back in January. At the time, executives warned revenue could fall as much as 5 percent in the current fiscal third quarter -- the first decline in its 11-year history as a public company.
"We have seen the same slow growth in orders in the first six weeks of this quarter that we saw in January," Chambers said. "It's becoming more challenging, especially in the Asia-Pacific region," he said, adding that there are also signs of sluggishness emerging in Latin America and Europe.
Last Friday the company said it will cut between 5,500 and 8,000 jobs through layoffs and attrition between now and July. As a result of the layoffs, Cisco said it expects to take a charge of $300 million to $400 million by the end of the fourth quarter of fiscal 2001. The job cuts will affect 2,500 to 3,000 temporary and contract workers; and 3,000 to 5,000 regular employees through voluntary attrition and layoffs, Cisco said.
More than any other sector, the slide has battered an infant "Internet economy" based largely on projections for exploding online usage.
Chambers said that Cisco, the world's biggest supplier of equipment for connecting computer networks, is still confident in long-term demand for online services and network capacity, and is standing by its annual revenue growth projections of 30 percent to 50 percent.
However, he said, the current uncertainties make near-term projections a vexing task.
"Visibility is tight. We're not able to see out into future like we normally would," said Chambers. "I don't think anyone in this room can tell us what capital spending will be in the next four quarters."
"We got hit hard, and this is going to be a rough transition, but we're not going to overreact as a company," he added.
Shares of Cisco (CSCO: Research, Estimates) rose $2.56 to $21.37 on the Nasdaq, leading a rebound of tech stocks after Monday's free fall.
-- from staff and wire reports 
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