Cisco Sees Slowdown
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Cisco told investors on Wednesday exactly what they didn't want to hear: that growth slowed dramatically in January and may not rebound for several months.
The assessment from CEO John Chambers on the company's conference call sent Cisco's shares skidding by 7% in after-hours trading to a new 52-week low.
Cisco's sales for the quarter that ended in January rose 16.5% to $9.83 billion, just ahead of Wall Street estimates, while pro forma earnings of 38 cents a share, or $2.4 billion, met the Thomson Financial consensus estimate.
But Chambers said sales growth slowed to less than 10% last month, and while he said that may be an "aberration," he said it was prudent to assume that the "extremely challenging" environment "may continue for the next several months," so the company lowered its sales growth forecast to 10%.
Wall Street analysts were looking for 15% growth in the current quarter.
"We are seeing our U.S. and European customers being increasingly cautious," said Chambers, but he added that the company remains well positioned to meet its long-term growth target of 12-17%.
The news followed other weak recent economic indicators including an unexpected slump in the service sector last month that sent U.S. stocks plunging on Tuesday. Stocks lost ground again on Wednesday, as a Federal Reserve official's warning about inflation added to slowdown fears.
JDS Uniphase was a bright spot, soaring 26% after beating estimates and raising guidance, and Multi-Fineline was up 37% on its results.
Micron fell 10.8% on inventory concerns.
FormFactor, CNET, Riverbed, Travelzoo, CommVault, Double-Take and Radisys fell on their results.
The Nasdaq lost 30 to 2278, the S&P fell 10 to 1326, and the Dow lost 65 to 12,200. Volume declined to 3.98 billion shares on the NYSE, and 2.47 billion on the Nasdaq. Decliners led by a 20-12 margin on the NYSE, and 19-10 on the Nasdaq. Downside volume was 69% on the NYSE, and 74% on the Nasdaq. New highs-new lows were 15-80 on the NYSE, and 41-129 on the Nasdaq.