Cisco up but outlook flat

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Cisco's results for Q1 2003 saw sales revenue up nine percent and profits of US$618 million, but also brought a more cautious outlook for the second quarter.

For the first quarter 2003, Cisco posted earnings of US$618 million, or 8 cents per share, compared with a loss of US$268 million, or 4 cents per share, for its first fiscal quarter of 2002.

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

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 First Call.

Nevertheless, Cisco expects sales in the second quarter to be flat to down 3 percent to 4 percent with sales in its first fiscal quarter, according to president and CEO John Chambers.

"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."

Analyst had been expecting a forecast of a slight increase in revenue for the second quarter – traditionally a strong period for Cisco.

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 said 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.

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