Cisco exec says prudent outlook needed

 

A senior Cisco Systems Inc executive said on Thursday it was best to maintain a "prudent" outlook, adding to investor wariness following an analyst downgrade of Cisco shares.

 

Robert Lloyd, Cisco's senior vice president for the United States, Canada and Japan, said the company gave a cautious outlook in February and it is "appropriate to remain that way until we see any other dynamics in the market."

 

Cisco, the world's biggest maker of routers and switches which direct Internet traffic, warned in its last earnings report of a rapid slowdown in US and European orders, forecasting fiscal third-quarter revenue would rise just 10 per cent. Analysts had expected 15 per cent growth.

 

It had also said its full-year revenue growth would likely to be around the lower end of its target range of 13 per cent to 16 per cent.

 

Lloyd's comments, in a conference call hosted by Goldman Sachs, followed a report by UBS analyst Nikos Theodosopoulos, who downgraded Cisco shares to "neutral" from "buy."

 

"Our industry checks show orders are slowing, which gives us concern about the July quarter," Theodosopoulos said.

 

Lloyd, however, said he did not expect any change in pricing of Cisco's equipment regardless of the recent market downturn, and said demand for Cisco products would continue to be driven by online video and other new Internet uses.

 

"I want to reiterate that many of the long-term growth drivers that we've been focused on continue to be valid even in some of the challenging environments that we're facing," Lloyd said.

 

"That trend of video ... the expectation for continued growth in that area makes us most comfortable with the long-term potential of the service provider market," he said.

 

Cisco shares were down 2.4 per cent at $24.37 (Dh89) in afternoon trade after briefly falling as low as $24.01 (Dh88). The Nasdaq Composite Index by comparison, firmed 0.5 per cent.  (Reuters)