Cisco Outlook Disappoints

Company forecast 3%-5% increase in revenue but market expected 12.9%

Cisco shares plunged in after-hours trading on Nov. 10 after the networking giant and tech bellwether issued a disappointing revenue outlook for the current quarter.

Cisco shares fell 12.90% in extended trading to $21.33.

In a conference call with financial analysts, Cisco chief executive John Chambers said he expected revenue to grow by between 3%-5% in the current November-January quarter.

That fell well short of the expectations of Wall Street analysts who had forecast growth of 12.9% for the San Jose, California-based company considered a bellwether for technology sector spending.

"Our view is that we are going to power through what we believe to be some short-term challenges in the next several quarters," Chambers said.

"We also believe that the intermediate and long-term growth opportunities far outweigh the short-term challenges," he added. "With that in mind we plan to continue to invest in new markets and technology.

"It is realistic to return to a 12% to 17% growth goal in the not too distant future, assuming a return to a good economic growth," Chambers said.

Cisco said net profit rose eight percent in the first quarter of its fiscal year to $1.9 billion while revenue climbed 19.2% to $10.75 billion, slightly better than the $10.74 billion expected by analysts.

Cisco is a global leader in networking equipment but has added such offers as online conferencing, Internet telephony, software services, a tablet computer and a high-definition Flip digital video camera.

Copyright Agence France-Presse, 2010

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