Wednesday, 5 August 2009

Cisco at "tipping point"?

(By Richard Holway 10.00pm Wednesday 5th Aug 09) Cisco is another of our bellwethers - this time for the networked economy. Cisco's routers and switches are used predominately by big companies and telcos who are on a major cost-cutting crusade right now. So it's not overly surprising that revenues for Q4 fell 18% but profit nearly halved from $2b to $1.1b. However, this was better than analysts expected - so Cisco shares rose marginally in after hours trading.

CEO John chambers continued the optimistic mood talking of "positive order trends" and "we will look back and see a tipping point occurred in our business in Q4".

There is a difference between a tipping point and a nadir. I am prepared to believe that the latter has indeed been reached. The discussion now is how long we will stay at that low point. Of course the one thing that has been in short supply in the last year or so is 'confidence' and there are tangible signs (not least in the buoyant stock markets) that confidence is indeed returning. So we will be watching Cisco's next quarter's results with intense interest.

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