Chambers: Slow Spending Hurting Tech Sector
By: David Utter
Cisco CEO John Chambers gave the market a cold bath with his assessment of the economy, and its impact on technology spending for 2008. Now it's Cisco taking a dip.
Networking hardware/software titan Cisco has looked to the horizon of the present day economy. Judging by Chambers's comments, we will see a perfect storm of roiling clouds, mountainous waves, and ferocious winds to batter the good ship American Economy.
Technology companies hoping for some spending by businesses may have to keep on hoping. Cisco's recent earnings report for its second quarter showed gains in revenue (up 16.5 percent year-over-year to $9.8 billion), net income (up 7.2 percent YoY to $2.1 billion), and earnings per share (up 6.5 percent YoY to 33 cents).
Chambers told analysts in the latest conference call he forecasts only a 10 percent increase for Cisco's revenue in its third quarter. Business Week said disappointed Wall Street observers expected 15 percent growth.
Cisco's earning report prompted a short selloff this week, with shares dropping after hours on February 6 and the first half of the day on the 7th. The price began moving back up, with shares nearly back to the $23.97 mark they hit ahead of the earnings announcement on the 6th.
The slowdown in spending may persist for a few months. Chambers suggested corporate customers will start buying again once "a few months" have passed, according to CNN Money.
As of 11 am ET on February 8th, the Nasdaq index, heavy with technology stocks, rose to $2,309.70 following selloffs earlier in the week of stocks like Apple and Intel as a response to the less than cheerful news.
About the Author:
David Utter is a staff writer for InternetFinancialNews and WebProNews covering technology and business.
is an iEntry, Inc. ® publication
All Rights Reserved.