Cisco CEO: Comfortable With Long-Term Revenue View
Published on: 6th May 2008
NEW YORK -(Dow Jones)- Cisco Systems should post revenue growth of 9% to 10% in the fiscal fourth quarter, lower than expected, according to Chairman and Chief Executive John Chambers.
In the last quarter, Cisco forecast growth to hit the lower end of the 13% to 16% range, but the new range is even lower. Shares were up 32 cents to $26.65 in after-hours trading.
The U.S. still faces challenges, Chambers told analysts during a late Tuesday conference call. He added that he believes the tough times would be relatively short, although he said it was unclear when the company would return to its normal growth rate. U.S. and European customers were still cautious with their orders, he said, with U.S. orders particularly weaker than other regions. For the fourth quarter, the company expects gross margins of 65%, and believes operating expenses will be 36% to 37% of revenue, said Chief Financial Officer Frank Calderoni. The company also expects cash flow from operations to be between $700 million and $900 million, and earnings to be 4 cents to 6 cents lower than earnings excluding items based on acquisition and stock-based costs.
Chambers added he believes the weakness will give the company an opportunity to take market share from rivals, and he continues to be comfortable with the company's long-term revenue growth forecast of 12% to 17%.
Given the challenges in the market, the company has performed well, Chambers said, noting that a worsening market won't affect long-term expectations.
"If the market does continue to slow, we believe this will not dramatically change our long-term opportunities," he said.
Last quarter, Chambers had also backed the company's long-term growth target of 12% to 17%, but noted a slowdown in spending. In March, however, he expressed increased comfort over its long-term goal during an analyst conference, propping up the market.
Cisco reported fiscal third-quarter earnings on Tuesday of 29 cents a share. Excluding one-time items, it reported 38 cents a share.
Revenue, meanwhile, rose 10.4% to $9.8 billion.
Wall Street had an average estimate of 36 cents a share in earnings and $9.75 billion in revenue, according to Thomson Reuters.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020; email@example.com
(END) Dow Jones Newswires