Wednesday June 20, 6:44 am Eastern Time
Cisco sees 50-60 pct China sales grth for coming yr
biz.yahoo.com
By Vicki Kwong
GUANGZHOU, China, June 20 (Reuters) - U.S. network equipment maker Cisco Systems Inc's (NasdaqNM:CSCO - news) China unit expects mainland sales to slow in the coming fiscal year, but still sees growth of 50 to 60 percent.
``I think vast domestic demand has enabled China to stay unscathed from the global downturn in the sector,'' Cisco (China)'s vice president Thomas Lam told reporters after a symposium of multinational companies in Guangzhou. ``We're projecting 50 to 60 percent growth in sales in the next fiscal year, a more conservative estimate given the outlook for the global technology sector,'' said Lam.
He said Cisco (China) sales were expected to increase by more than 100 percent to about US$1 billion in the fiscal year ending July 31. China is now Cisco's fourth largest market - behind the United States, Britain and Japan. The Chinese government's initiative in IT development has allowed major cities to catch up with more developed economies in terms of technological advancement, said Lam. ``In many countries in Europe and America, the drive behind IT development comes from private enterprises,'' he said. ``But in China, the initiative comes from the government and applies to the whole country. This is very important because it's not easy for the private sector to set up a good IT infrastructure.'' The company's U.S. parent reported a US$2.69 billion loss after restructuring charges and excess inventory write-offs in its third quarter fiscal year results. This followed a 30 percent plunge in second quarter sales and ended its lengthy track record of 30-50 percent growth.
Guangzhou, the largest economic zone of China's largest southern province of Guangdong, had about 890,000 Internet users in 2000 and the number of users is expected to increase to 2.5 million by 2005, a government official said. Cisco (China) said it would continue to invest heavily in education on the mainland, Lam said. Last year, the company contributed about three billion yuan to set up networks in 30 universities in the poorer western regions in China. He added that the company was holding discussions with the Ministry of Education over a possible project but declined to give further details.
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