Cisco Forecast Weighed Down by Weak Spending on Telecom

Cisco Systems, the maker of network equipment forecast its profit for the current quarter below the estimates of analysts. The forecast was weighed down by telecom service providers cutting capital budgets and weaker sales in many emerging markets.

Shares at Cisco were lower by 1% in extended trading after the forecast was released. During the day, the stock had increased after Cisco reported revenue as well as profit that were better than expected for the recently ended quarter.

John Chambers the CEO as Cisco said the two or three service providers in the U.S. slowed their order rates dramatically with the company.

The No. 2 telecom service provider in the U.S., AT&T announced last week that it was cutting capital spending for 2015 from $21 billion to $18 billion.

Cisco also had struggled due to sluggish sales as well as increased competition in many emerging markets. Cisco said sales from China dropped by one third during the recently ended quarter.

Revenue from service providers in the U.S. fell 18%, while it fell by 6% across emerging countries, said the company.

The company adjusted the profit forecasts to 50 to 52 cents a share and a revenue increase of 4% to 7% for the quarter that ends in January of 2015.

Analyst forecasts had profit at 53 cents a share.

Cisco reported profit and revenue for its fiscal first quarter that was better than had been expected due to more demand for its new high end routers and switches.

Kelly Kramer a senior vice president will be the new CFO, as Frank Calderoni the current CFO will step down January 1.

Cisco’s total revenue was up finishing the quarter at $12.25 billion compared to last year in the same period of $12.08 billion.

Net profit was down to $1.82 billion, equal to 35 cents a share compared to $2 billion equal to 37 cents a share from the same period last year.

Adjusting for certain items, earnings ended at 54 cents a share. Analysts were expecting profit to be 52 cents a share on $12.15 billion of revenue.

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