Carrying the tech world on its shoulders must be tiring for Cisco Systems (NASDAQ:CSCO, news, filings), given the thanklessness of the task. In their fiscal Q1 earnings report today, the equipment giant reported revenues of $10.75B and non-GAAP earnings per share of $0.42, both of which exceeded analyst forecasts. That happy news was greeted by a 13% decline in the stock price after hours, which when you're as big as Cisco is a $15B haircut in marketcap.
It was the outlook for their fiscal Q2 that seems to be the problem, with revenues expected to be only $10.1-10.3B, whereas the street was expecting something more like $11B. Of course, when you've promised 12-17% long term sales growth, analysts tend to be expect that sort of thing. Cisco blamed the anticipated Q2 weakness on moderating capital spending, confirming that the economy isn't exactly roaring back. One area of particular weakness was in the public sector, both domestically at the state government level and internationally in Europe and Japan.
But then we already knew the economy isn't exactly in danger of overheating, that the recovery is at best taking its sweet time recovering. It's just that everyone was hoping Cisco would provide its usual optimistic dose of futuristic awesomeness as a counterbalance. You know what I mean, that vision where video bits will soon swamp all that we know and even allow a company as big as Cisco to grow like gangbusters to support it all. This quarter they just weren't able to pull it off, and the weather this winter looks a bit colder for it - global warming notwithstanding. Maybe when Spring rolls around.
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