Cisco CEO hangs up role as economy's cheerleader
For the last few quarters, John Chambers has been a font of optimism about the economy’s prospects.
But on Wednesday the chief executive of Silicon Valley computer networking giant Cisco Systems sharply dialed down his tone.
Although Cisco reported a 74% jump in per-share earnings in the fiscal fourth quarter ended July 31 on a 27% rise in sales, Chambers wasn’t his usual ebullient self about the general economic outlook.
“Whether the global economy continues to show mixed signals or not, the strength of our financial model and profit generation serves us well,” Chambers said in a statement accompanying the earnings.
Contrast that with his statement on May 12, when the San Jose company reported fiscal third-quarter results: “We witnessed a return to strong balanced growth across geographies, products and customer segments that we haven't seen since before the global economic challenges began,” Chambers said back then.
And in February he lauded Cisco’s fiscal second-quarter earnings as “a clear indication that we are entering the second phase of the economic recovery.”
On a conference call with analysts Wednesday afternoon, after Cisco's earnings report, Chambers stayed cautious. He said he wasn't “making a call on the economy,” and instead endorsed Federal Reserve Chairman Ben S. Bernanke’s description of the outlook as one fraught with “unusual uncertainty.”
"I'm having probably more trouble reading it [the economy] than I ever have before," Chambers said.
Cisco still expects another big jump in sales this quarter as many companies worldwide continue to spend on tech equipment. But the firm’s projection of an 18% to 20% rise in sales trailed analysts’ consensus forecast of a 21% increase.
Ending a bad day for stocks on a downer note, Cisco’s shares fell to $21.79 in after-hours activity following the earnings report, an 8% drop from their regular-session close of $23.73.
The stock now is down 0.9% year to date after soaring 47% last year.
Tech stocks in general have been hammered the last two days on fresh concerns about the economy. The Nasdaq composite index has tumbled 4.2% since Monday after gaining 6.9% in July.
-- Tom Petruno
Photo: Cisco CEO John Chambers. Credit: Paul Sakuma / Associated Press