Cisco Systems Inc, the largest maker of computer networking equipment, said fourth-quarter sales rose less than analysts estimated as companies reined in spending because of the sluggish economy.
Net income increased to $US1.94 billion, or 33 US cents a share, from $US1.08 billion, or 19 US cents, a year ago, the San Jose, California-based company said today in a statement. Sales climbed to $US10.8 billion in the period ended July 31 from $US8.54 billion. Analysts had predicted $US10.9 billion.
Spending by global companies on equipment to handle a flood of data, videos and messages delivered to smartphones, tablet devices and computers will slow to 4 per cent next year as the economy weakens, according to Goldman Sachs Group Inc. While Cisco is expanding into more than 30 new markets, its stock has trailed smaller rivals Juniper Networks Inc. and Riverbed Technology Inc. in the past three months.
"Coming out of a downturn, Cisco needs to show better than typical seasonal growth," Mark McKechnie, an analyst at Gleacher & Co. in San Francisco, said in a note to investors. He has a "buy" rating on the shares. "The recovery is still fragile and could be short-lived. We are just seeing catch-up on maintenance spend right now."
Excluding some costs, profit was 43 US cents a share, above the 42-US-cent average estimate of 34 analysts surveyed by Bloomberg.
Cisco fell $US1.15 to $US22.58 in late trading after the results were announced. The stock had dropped 58 US cents to $US23.73 in New York on the Nasdaq Stock Market.