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Cisco Systems grew sales and earnings for its first quarter despite a slowdown in U.S. enterprise sales, a segment Chairman and CEO John Chambers said would be "lumpy" moving forward.
"The U.S. enterprise, probably as a surprise to no one, is experiencing some softness ... We expect and continue to expect U.S. enterprise growth to be very lumpy both by U.S. areas and industries moving forward," Chambers said during a conference call to discuss the San Jose, Calf.-based vendor's first quarter fiscal 2008 financial results.
The U.S. service provider and commercial markets remained strong for the networking vendor, both turning in year-over-year order growth of roughly 20 percent. Not so for the enterprise space, Chambers said.
Cisco's U.S. enterprise business, including the public sector and federal, saw year-over-year order growth in the mid-single digits. That included federal year-over-year order growth of 17 percent, "while the rest of enterprise growth was down slightly from a year-over-year perspective," Chambers said.
Chambers saw "pretty dramatic" order decreases in some U.S. enterprise segments.
"In financial services, especially the large financial institutions, we did see pretty dramatic year-over-year decreases in orders, and the same was true in areas such as automotive. Retail was, candidly, a mix in terms of the approach, so we saw some very mixed results from the retail segment," Chambers said. "Those are probably the three industry categories that were most affected."
Cisco took steps this week to bolster both its commercial and enterprise business in the U.S. and abroad. The vendor launched new SMB VoIP and networking products, noting that it has added 1,000 certified SMB solution providers to its global partner ranks.
The company also launched new high-end switches, bringing virtualization to enterprise networks with a new module for its flagship Catalyst 6500 switches and rolling out the next generation of its Catalyst 4500 platform. Some U.S. enterprise customers were waiting for the new switches before moving ahead with purchases, Chambers noted.