- Associated Press - Wednesday, November 10, 2010

NEW YORK (AP) - Cisco Systems Inc. said Wednesday that its earnings for the latest quarter climbed from last year. But the company’s outlook for the current quarter cast doubt on the pace of recovery in corporate technology spending and sent Cisco’s shares skidding.

New downbeat comments from the company’s CEO on the pace of its customers’ spending also helped push shares lower in extended trading.

The stock dropped $3.02, or 12.3 percent, to $21.47 after the report was released. Earlier, the stock added 14 cents to close at $24.49.

On a conference call with analysts, Chief Executive John Chambers said that new orders from government customers as well as some service providers fell below the company’s expectations.

That’s after Chambers rattled investors back in August by pointing to “unusual uncertainty” among customers about the economy.

As the world’s biggest supplier of network equipment, Cisco offers a fair reading on the pace of corporate investment. And it’s a more forward-leaning barometer than most companies because its most recent quarter includes October, whereas most companies have recently reported results for the July-September period.

But some analysts worry the latest shortfall in Cisco’s revenue projections may have more to do with smaller competitors eroding its dominant market position.

“If you look at what Cisco’s peers have said, as well as other data points in the supply chain, they’ve been arguably more upbeat,” Kaufman Bros. analyst Shaw Wu said. “The concern is that Cisco is growing slower than the market.”

Cisco said Wednesday it earned $1.9 billion, or 34 cents per share, in the fiscal first quarter ended Oct. 30. That’s up 8 percent from $1.8 billion, or 30 cents per share, a year ago.

Stripping out unusual items, it would have earned 42 cents per share. Analysts expected 40 cents.

Revenue rose 19 percent to $10.75 billion, just above the average forecast of $10.74 billion.

But that was still below the $10.95 billion that analysts had predicted for the quarter in August, before the company lowered expectations.

Cisco’s outlook for the quarter that ends in January also fell short. It expects revenue growth over the same quarter a year ago of 3 percent to 5 percent. That works out to between $10.1 billion and $10.3 billion, while analysts expected $11.08 billion.

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