Cisco CEO Uses The “L” Word, Sending Tech Down
“People were thinking more growth in the upcoming quarter, but Cisco kind of reset those expectations.”
– Mark Sue (subscription required), Analyst, RBC Capital Markets
“There was a stark contrast between management’s cautiousness on this quarter’s conference call and the bullishness on the prior quarter’s call, when management upped guidance and trumpeted the strong growth outlook. The change of tone left investors with concerns about a potential rapid deterioration in the spending environment and questions about broader implications.”
– Tal Liani (subscription required), Analyst, Merrill Lynch, in a note lowering his price target on Cisco from $35 to $33.50
What is it coming to in corporate America today?
First, DR Horton CEO Donald Tomnitz says 2007 will “suck”.
And now Cisco CEO John Chambers used the “L” word to describe business.
Frankly, it’s disgusting!
In giving his forecast for business going forward, Chambers last night said that US spending will be “lumpy”. Lumpy!
Obviously, not the kind of thing investors on Wall Street want to hear.
So, while Cisco’s latest quarter was solid (1Q FY 2008 Earnings Release) the forecast has raised some red flags about tech spending going forward, sending Cisco’s shares down 7% and the overall Nasdaq about 1%.