Posted on: Tuesday, October 8, 2002

Cisco CEO says telecom rebound to lag

By Scott Lanman
Bloomberg News Service

ORLANDO, Fla. — Cisco Systems Inc. Chief Executive Officer John Chambers said a recovery in the telecommunications industry will lag a rebound in the broader technology industry by two to six quarters.

CEOs "are probably the most cautious I've seen in my business career," the head of the world's largest maker of communications equipment said at a Gartner Inc. conference in Orlando, Fla., yesterday.

Chambers was referring to his peers' ability to forecast their business prospects, spokeswoman Abby Smith said.

Cisco shares have tumbled 28 percent in the past three weeks on concern the company's fiscal first-quarter sales may fall from the preceding period after holding steady at $4.8 billion for three consecutive quarters. Corporations aren't boosting spending on network gear, while phone and Internet-service providers such as SBC Communications Inc. continue to trim budgets.

Chambers said he couldn't predict when the industry's prospects will improve.

On Aug. 6, Chief Financial Officer Larry Carter said Cisco's sales in the three months ending Oct. 26 would be unchanged or rise by a "very low single-digit" percentage from the prior period's $4.83 billion.

Chambers said on a conference call that day that compared with three months ago, he was more optimistic about how Cisco was running its business and "more cautious" about external factors affecting the company.

Two weeks ago, Chambers told an investor conference that CEOs were having more difficulty forecasting their business than they had been in the previous few months.