Cisco predicts Q2 slump

Chambers: Our customers are facing a challenging environment

Industry bellwether Cisco has posted solid Q1 results but chief executive John Chambers has predicted a slump in revenue during the coming months.

For the three months to 25 October, revenue based on generally accepted accounting principles (GAAP) was up eight per cent year on year and stood at $10.3bn (£6.47bn). GAAP net profit was down 0.2 per cent on 2008's first quarter to $2.2bn.

Chambers said: "Cisco delivered solid revenue and earnings growth in what is clearly a very challenging global economy. Our strategy and focus for managing the business through this market transition is clear - we will manage and prioritise our resources, invest in innovation, and build even stronger relationships with our customers to help enable their success."

He offered a gloomier outlook during a conference call to discuss the results and indicated sales were now beginning to suffer. He predicted that Cisco's revenue for 2009's second quarter would decline between five and 10 per cent.

"We are seeing customers, not just in the financial, automotive or retail sector, but across most of our enterprise industries facing what they view is a very challenging business environment,” he said. “This started in the US, it then, in our opinion expanded to Europe, then to emerging market theatre, and now to Asia.”