Cisco Expects Flat Sales In Its Second Quarter

Speaking on a conference call after the markets closed Tuesday, Chambers said Cisco's customers' visibility into future sales has tightened in the past few months. "Our customers are a little bit more cautious" this quarter, Chambers said. "So, from an external standpoint, I'm a little bit more cautious than last quarter."

Chambers said he spent the past month meeting with 30 CEOs and 129 other executives at customers in 17 cities in eight countries. Based on those visits, Chambers said he is confident that when the economy turns up, the networking business will pick up with some lag time. Cisco expects that small-business spending will pick up first, followed by enterprise spending, he said.

Chambers added that spending on security, IP telephony, storage, wireless LANs and convergence show the most promise for growth in the next 12 months, based on his visits with customers in the past month.

Cisco on Tuesday posted earnings of $618 million, or 8 cents per share, for its first fiscal 2003 quarter, compared with a loss of $268 million, or 4 cents per share, for the year-earlier quarter.

Sales for the 2003 quarter were $4.8 billion, up 9 percent from sales of $4.4 billion in the year-ago quarter.

Excluding charges, Cisco posted earnings of $1 billion, or 14 cents per share, for the quarter. Analysts were expecting earnings of 13 per share, according to Thomson Financial/First Call.

Tom Shaw, president and CEO of Wide Area Management Services, a Santa Clara, Calif.-based solution provider, said Cisco's results were no surprise. As a Cisco Silver partner, his company's hardware sales have been growing month-over-month since bottoming out in May, but still haven't reached the levels of a year ago, Shaw said.

"Cisco is a bellwether for the industry, but its Silver and Gold partners are a bellwether for Cisco," Shaw added.