'Canary in the coal mine' Cisco cuts growth forecast

John Chambers says networking giant sees problems two to three quarters ahead of its peers as long-term growth projections trimmed

Cisco's share price sank to a seven-month low last night as it cut its long-term growth forecasts.

The networking giant said in an analyst meeting that it had downgraded its three- to five-year revenue growth target to between three and six per cent, down from its previous range of five to seven per cent.

Although it is banking on the Internet of Everything to drive long-term growth, it tempered its outlook due to fears over "headwinds" including macroeconomic conditions and conservative customer budgets.

The NASDAQ-listed giant also cut its target for earnings-per-share growth to between five and seven per cent, down from seven to nine per cent.

Cisco's shares dipped three per cent on the news, not the first time the router and switching juggernaut has been bashed by Wall Street in recent weeks after investors were spooked by Q1 results revealing a fall in emerging-market revenue.

But chief executive John Chambers reassured reporters that Cisco's troubles were mainly a reflection of its tendency to experience macro-issues ahead of rivals rather than Cisco-specific.

"We are the canary in the coal mine," Chambers said, according to Reuters, adding that Cisco often sees problems at least two quarters before the competition.

With Gartner estimating the number of "things" that will be connected to the internet (not including PCs, tablets and smartphones) will rise from 0.9 billion four years ago to 26 billion by 2020, Cisco said the Internet of Everything would be a "long-term play" for the firm.

Although the vendor expects its core router and switching business to grow by just nought to one per cent over the next three to five years, datacentre will grow by 20 to 25 per cent, mobility and wireless by nine to 13 per cent, security by 10 to 15 per cent and services by seven to 10 per cent, it estimated.