Cisco profit up but stock falls

Cisco reiterated its long-term outlook

Computer network equipment maker Cisco Systems' profit has jumped 37%, but its shares fell sharply amid fears that US firms are cutting network spending.

For the three months to 27 October, Cisco's net income was $2.2bn (£1bn), compared with $1.6bn a year ago.

Revenue rose 16.7% to $9.6bn, in line with forecasts, but chief executive John Chambers said orders fell from banks and carmakers.

Cisco shares fell 4% on the Nasdaq and then almost 10% in after-hours trading.

"The US enterprise, probably as a surprise to no-one, is experiencing some softness," said Mr Chambers.

Nervousness

'In line' wasn't good enough Show Wu, an analyst with American Technology Research

"A lot of people are very nervous about the US enterprise spending slowing down and bleeding into other segments of the markets in the US and abroad," said analyst Bill Choi at Jefferies & Co.

Besides, some investors were disappointed Cisco results did not exceed Wall Street forecasts.

"'In line' wasn't good enough," said Show Wu, an analyst with American Technology Research.

Cisco recorded robust growth outside the United States. Sales in developing countries went up 35%, offsetting the slower performance in the US market.

"Our business is across every major country in the world, and it's across all product lines, and it's really across all customer segments," Mr Chambers said.