Cisco Sees Slower Growth Rates
(03/09/98; 12:06 p.m. EST)
By Larry Dignan, TechInvestor
In a filing with the Securities and Exchange Commission Monday,
Cisco said it sees slower growth rates as sales to small- to midsized
businesses outpace its high-end products and Asia remains a
question.
Cisco [CSCO] reported strong second quarter earnings, but is in a
traditionally slow quarter, where backlog is reduced. Wall Street is
expecting the San Jose, Calif., networking giant to report third
quarter earnings of 44 cents a share.
"The company expects that in the future, its net sales may grow at a
slower rate than was experienced inprevious periods, and that on a
quarter-to-quarter basis, the company's growth in net sales may be
significantly lower than its historical quarterly growth rate," Cisco
said. "In recent quarters, the sequential sales growth has slowed
from prior levels, and a disproportionate share of the sales has
occurred in the last month of the quarter.
"The sales growth rate for lower-priced access and switching
products targeted toward small and medium-sized businesses has
increased faster than that of the company's high-end core router
products," the company said. "These products typically carry lower
average selling prices, and thus have slowed the company's growth
rate vs. the second quarter of last year. Some of the company's more
established product lines, such as the Cisco 2500 product family,
have experienced decelerating growth rates."
In addition, Cisco forecast slower sales in Asia, but said the
company hasn't been hurt by the financial problems abroad yet.
"The company anticipates sales in Asia will remain weak in the
near future," Cisco said.
"If the economic conditions in these markets worsen, or if these
unfavorable conditions result in a wider regional or global
economic slowdown, this may have a material adverse impact on
the company's business, operations, and financial condition. The
company continues to monitor activity in the region closely," the
company said.
Europe could also be a problem for Cisco, the company said. Cisco
said it recently expanded its operations in Europe and "expects to
see an increase in exposures related to non-dollar-denominated
sales in several European currencies."
The company said it will hedge currencies to minimize fluctuations.
|
