Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Has Cisco Escaped the Air Pockets?

The last time the networking giant Cisco System reported quarterly earnings, CEO John Chambers used the phrase “air pockets” to describe the surprise sour turn in its guidance that showed sales would grow only between 3 and 5 percent, way below the 13 percent that analysts had expected. Shares in Cisco fell like a rock, from $24.49 on Nov. 10 to $19.07 on Dec. 3, and have leveled off near $22 a share in recent days.

Today’s the day we find out whether Cisco has successfully navigated the turbulence, and how bad the air pockets truly were. So far, the indications suggest that Cisco is starting to fly clear of the trouble. The consensus of analysts surveyed by Thomson Financial calls for Cisco to report per-share earnings of 35 cents on sales of $10.24 billion.

Barclays Capital analyst Jeff Kvaal wrote in a research note issued Monday that Cisco’s end markets look healthy. Telecom carriers and Internet service providers are spending, and you see that reflected in reports from Juniper, which show sales to service providers up 24 percent, and in AT&T’s optimistic capital spending outlook. Meanwhile, growth in enterprise spending is holding steady as companies improve their networks. And in the end, Cisco’s guidance for sales to grow 3 to 5 percent may prove a tad conservative, meaning those air pockets may not have been as entirely bad as originally thought.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work