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Cisco lowers its revenue, earnings estimates

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Cisco (Nasdaq: CSCO) has forecast that its mid-term revenue and earnings will be 3-6 percent per year, down from 5-7 percent as it sees issues with emerging markets, slower customer spending and lackluster core network equipment growth.

Chief Financial Officer Frank Calderoni, reports Reuters, said that revenue in Cisco's core network equipment business would be flat to up 1 percent in the same time frame.

At the same time, the vendor said it is seeing growth in the data center, cloud, mobility and security segments. It expects that these areas will offset flat revenues in its core business.

The vendor plans to reduce operating costs as a percentage of sales to the low 30s from 34 percent last year and 35 percent the previous year.

John Chambers, Cisco's CEO said that while they are seeing positive signs in the U.S. market, emerging markets such as Russia and Brazil continue to struggle. "If the U.S. does well we'll pull the rest of the world out of this," he said.

During its fiscal Q1 2014 financial reporting period, Cisco's revenues rose 1.2 percent year-over-year to $12 billion, net profit dropped 4.6 percent to $2 billion.

A key concern in Q1 was service provider sales. It reported that service provider video equipment sales declined 8 percent, and NGN routing systems were 1 percent lower year-on-year at $2.04 billion.

Despite ongoing declines in the video business, Cisco said it is "not getting out of set-top boxes."

For more:
- Reuters has this article

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