US banks stay away from Cisco in Q1
Sub-prime takes the shine from quarter
Cisco System profit rose 37 per cent in its first quarter '08, with growth in the networking equipment maker's international segments offsetting a "lumpy" US enterprise market.
On conference call today CEO John Chambers attributed the lumpiness US enterprise spending to a "dramatic" fall in orders from US banks in the quarter. We guess they are too busy firefighting the sub-prime lending crisis to worry too much about replacing the routers.
Investors may have been worried about a wider slowdown, and sent shares tumbling $2.75 or about eight per cent in after hours trading. Cisco stock finished down $1.33 at $32.75 at the end of the regular trading session.
Q1 net income was $2.2bn, a jump from $1.6bn reported a year ago. Net sales advanced 16 per cent to $9.6bn from $8.2bn year-over-year.
Operating income was $2.3bn, up from $1.9bn last year.
"The dependancy on the US is not what it was before," said Chambers. "It used to be when the US caught a cold, the rest of the world got pneumonia. That's not the case now."
He is optimistic about continued growth in emerging markets, but said Cisco's growth will remain at 16 per cent year-on-year for the quarter, with full-year growth at 13 to 16 per cent. ®