Cisco Affirms Business Has Stabilized
By Jennifer Tan
SINGAPORE (Reuters) - U.S. networking giant Cisco Systems Inc. affirmed on Thursday that business conditions had stabilized and said Asia would contribute an increasing share to group revenues in the next few years.
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``We see things have stabilized and are a lot better than the months from February to July where they were falling very significantly around the world and in Asia,'' Gary Jackson, Cisco's vice president of Asia, told Reuters in an interview.
``We hope the year 2002 will show the kind of improvements that the GDP (gross domestic product) growth predictors are suggesting, that it will be marginally better than 2001, but we are all just going to have to wait and see.''
Chief executive John Chambers told analysts earlier this month that Cisco's orders were stable in November and had met expectations.
The California-based company, which makes routers and switches that direct data around the Internet, reported earnings before a number of one-time items fell to $332 million or four cents a share from $1.4 billion or 18 cents a share for the quarter ending October 31 versus the year before.
Sales for the fiscal first quarter fell 32 percent to $4.45 billion but topped Wall Street's and Cisco's expectations. Sales rose from the previous quarter's $4.3 billion, the first time that has occurred this calendar year.
Cisco has said it expects fiscal second-quarter sales to be flat to slightly higher in the low single-digit percentage point range versus the previous quarter.
Analysts forecast the company's per-share results at a three-cent profit in the second quarter, with estimates ranging from a one-cent loss to a five-cent gain.
ASIA'S SHARE TO GROW
Jackson indicated Asia's share of Cisco's global revenues could rise several percentage points from the current 11 percent in the next few years, thanks to the region's burgeoning Internet users, focus on wireless devices and populous markets.
``We have gone from six to 11 percent over the last three years,'' he said.
``If Asia continues to deregulate at the right pace and make the right infrastructure commitments -- if all went well, I'd be disappointed if we couldn't pick up a similar number of points as a contribution to our business worldwide as we've done in the last two to three years. That's what we should achieve.''
Cisco has achieved about 80 percent market share in the routers space and 50 percent in switches, giving it an overall 60 percent share in the Asian region, Jackson said.
While the company has not set specific market share goals per country, it expects to increase share by ensuring customer service satisfaction and clinching large contracts in the region.
Jackson noted that global economic trends have pushed large enterprises to scrutinize the health of their suppliers.
``Over the last 12 months, we saw aggressive investment sentiment in the market but now we have conservative, careful, return-on-investment expenditure views that lead people to ask tougher questions and to be more selective about who they are willing to do business with,'' he added.
``There is without question going to be a smaller number of bigger players in this market.''
Cisco's financial strength -- the company has $19 billion in cash and zero debt -- will ensure it remains at the forefront of the competition, Jackson said.
Cisco shares closed at $20.50 on Wednesday in New York. |
