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Cisco Orders Pick Up as Customers Upgrade Networks |
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Posted at Sunday, April 15, 2007 |
April 13 (Bloomberg) -- Cisco Systems Inc.'s orders continue to pick up as customers upgrade their computer networks, easing concern about an economic slowdown. The shares rose 2.7 percent.
Clients of Cisco, the world's biggest maker of computer- networking equipment, are in the ``early phases'' of an upgrade cycle, Chief Development Officer Charlie Giancarlo said. The company is also benefiting from growth in the emerging markets and Europe, he said.
``We're seeing good economic growth overall,'' Giancarlo said today in an interview. ``The small and medium-sized business market has been a constant grower for us. It seems to be somewhat immune to swings in the economy.''
Chief Executive Officer John Chambers said in February that Cisco's sales are growing at the top end of its expected range of 10 percent to 15 percent. Giancarlo's comments soothed investors after reports on rising inflation and a slowdown in the housing market sparked concern growth could stall.
Shares of San Jose, California-based Cisco rose 71 cents to $26.68 at 4 p.m. New York time in Nasdaq Stock Market trading. They have dropped 2.4 percent this year.
``There's been some nervousness out there about spending and demand,'' said Inder Singh, a Prudential Equity Group analyst in New York who rates the shares ``neutral weight.'' ``It's good for them to come out and sound optimistic.''
Three Straight
Cisco's had three straight quarters of sales growth in excess of 20 percent, helped by last year's $6.9 billion acquisition of cable set-top box maker Scientific-Atlanta Inc. The company last month agreed to purchase WebEx Communications Inc., the largest provider of Internet teleconferencing services, for $3.2 billion as it expands beyond its traditional switches and routers business.
More than a quarter of Cisco's revenue comes from small and medium-sized businesses, where sales are growing faster than in the large business market, Giancarlo said.
The company is developing cheaper versions of computer and phone networking systems as smaller businesses upgrade their corporate networks.
That market is ``more robust and less jittery'' because many of those companies aren't public and don't worry about investor reaction to spending increases, Giancarlo said.
Economic Concern
His comments follow evidence that may indicate slowing U.S. economic growth. A report two days ago said prices of goods imported into the U.S. rose last month by the most since May 2006. Also this week the National Association of Realtors predicted the median price for a home will decline this year for the first time since the group began keeping records in 1968.
``Overall, we're not yet seeing the kinds of weakness that is being forecast for the economy,'' Giancarlo said.
Shares of smaller rival Juniper Networks Inc. rose 11 cents to $20.59. Nortel Networks Corp., North America's biggest maker of telephone equipment, gained 17 cents to $24.38.
Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=a9gNhZ9tM.U0&refer=home |
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