Cisco Beats Street, Despite 'Cautious' Enterprise Buyers

Despite posting quarterly numbers that beat or met most analysts' expectations, Cisco Systems continues to see cautious purchasing decisions in the enterprise networking market, according to CEO John Chambers.

February 4, 2004

2 Min Read
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Despite posting quarterly numbers that beat or met most analysts' expectations, Cisco Systems continues to see cautious purchasing decisions in the enterprise networking market, according to CEO John Chambers.

"It was a very solid quarter for Cisco," said Chambers, in a conference call announcing the company's figures for the three-month period ending Jan. 24. While Cisco's net sales for the quarter increased to $5.4 billion (compared to $4.7 billion in the like period a year ago, and $5.1 billion in the previous quarter), Chambers said enterprise CEOs are still proceeding with "unusual caution" on capital-expenditure budgets and hiring.

"The [enterprise] CEOs are still more cautious than you would think," given the overall economic recovery, Chambers said. Still, increases in the company's sales to smaller businesses and telecom service providers helped lift Cisco's earnings for its second fiscal quarter of 2004 to $1.3 billion, or 18 cents per share, meeting or beating analyst expectations of 17 cents to 18 cents per share. (Cisco's GAAP earnings, which included accounting changes related to its acquisition of storage concern Andiamo Systems, were $724 million, or 10 cents per share.)

Chambers said Cisco was "very pleased" with sales increases for its high-end 12000 and 10000 router lines, and said there were "across the board" gains in Cisco's Advanced Technology product line, which includes IP telephony, home networking, optical products, security, storage and wireless.

"It was a very solid quarter for Cisco," said Chambers, who expects the recovery to continue, and eventually include those cautious enterprise customers."I would hope [the enterprise market] will pick up, and we believe it will," Chambers said, explaining that some enterprise CEOs appear to be "very careful" about taking spending risks after "three years of false starts.

"As our customers' businesses improve, so will ours, if we continue to execute," Chambers said.

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