Cisco earnings down; January notably weak

NEW YORK: Technology bellwether Cisco Systems Inc. said Wednesday that incoming orders declined dramatically in January, indicating that the shrinking economy has more pain in store for the industry.

Chief executive John Chambers said the company, the world's largest maker of computer networking gear, saw progressively fewer orders as its latest quarter progressed. In November, orders were down 9 percent from the year before. In January, the drop was 20 percent.

Cisco's fiscal second quarter ended Jan. 24, nearly a month after other technology companies that have reported their quarterly results recently. That means Cisco's results provide a window into future reports from the rest of the industry. Cisco is also sensitive to trends in the market because more than 80 percent of its revenue is from sales, rather than recurring service contracts.

Chambers projected a 15 percent to 20 percent drop in revenue in the current quarter. That would put revenue at $7.8 billion to $8.3 billion, below the average estimate of $8.7 billion projected by analysts polled by Thomson Reuters.

Cisco shares fell 48 cents, or 3 percent, in extended trading after Chamber's comments.

Profit fell 27 percent in the just-ended quarter, but the company still beat Wall Street's lowered expectations.

Net income in Cisco's the quarter was $1.5 billion, or 26 cents per share. That was down from $2.1 billion, or 33 cents per share, a year ago. Excluding items, earnings were 32 cents per share.

Sales were $9.1 billion, down 7.5 percent from a year ago.

Analysts had expected earnings of 30 cents per share on $9 billion in revenue.