Air Pockets Force Cisco CEO to Turn On Seatbelt Sign
Cisco’s shares took a beating yesterday and they’ll likely take another one today, now that investors have had time to ruminate on the company’s latest earnings, its guidance for the next quarter and CEO John Chambers’s forthright comments about it.
On a conference call with analysts, Chambers said Cisco expects revenue to grow by just 3 percent to 5 percent in the current quarter, compared to last year–not even close to the 13 percent Wall Street was projecting. “Our view on this guidance is, we’re disappointed,” Chambers said, adding that sales orders were below the company’s initial Q1 forecast by more than $500 million. “We hit a couple of air pockets,” he said. “We wish we‘d seen them coming.”
Air pockets. Interesting way to describe the challenges the company’s facing these days, which according to Chambers include everything from Cisco’s set-top box to the public sector, service providers and European businesses.
Sounds like Cisco’s flight this past quarter has been a bumpy one, but as Chambers observed, “When you hit an air pocket, that doesn’t mean that what you have been doing strategically is wrong.” I suppose it doesn’t. And keeping that in mind, Cisco will stay the course as it moves forward.
“We are going to power through what we believe to be some short-term challenges in the next several quarters,” Chambers said. “We also believe that the intermediate and long-term growth opportunities far outweigh the short-term challenges. With that in mind we plan to continue to invest in new markets and technology. It is realistic to return to a 12 to 17 percent growth goal in the not too distant future, assuming a return to a good economic growth.”