NETWORK WORLD NEWSLETTER: JIM DUFFY WITH VIEW FROM THE EDGE 08/17/04 Today's focus: Net economy turning south?
Dear [EMAIL PROTECTED], In this issue: * Cisco's outlook dims prospects for 2004 * Links related to View from The Edge * Featured reader resource _______________________________________________________________ This newsletter is sponsored by Dupont(TM) In the event of a fire, securing your business uptime is critical, introducing DuPont(TM) certified limited combustible cable. To learn more, read the DuPont(TM) whitepaper now, Limiting the Plenum Cable Fire Risk, no registration required. http://www.fattail.com/redir/redirect.asp?CID=72585 _______________________________________________________________ Network World Custom Webcasts: Get Up to Speed Highly focused, single-topic briefings on the latest news and information from experts in technology streamed to your desktop. On vital topics like security, applications, wireless, more. Fully interactive, hype-free content you can access 24/7. All yours for FREE! Register now! http://www.fattail.com/redir/redirect.asp?CID=72495 _______________________________________________________________ Today's focus: Net economy turning south? By Jim Duffy The holidays may be a little less bright this year if Cisco's financial outlook is any indication. The company's "record breaking" fourth quarter was tempered by a caution going forward as customers rein in spending on network equipment due to a weak economy and election-year uncertainty. Cisco recorded the highest net income and earnings per share in its history for the fourth quarter ended July 31; but the company gave a downcast preview for the first quarter of fiscal 2005 citing lessened optimism and decreased spending among customers, due mainly to macroeconomic factors like the gross domestic product (GDP). CEO John Chambers says Cisco bases its own guidance on that of its customers. If they are a little more cautious in their optimism on their business prospects, he says, so is Cisco. For example, Cisco expects that the U.S. federal government will not raise spending as much as anticipated in the first quarter due to more balanced spending throughout the year, Chambers says. Also, the first quarter is usually the weaker quarter for Cisco. As a result, Cisco is expecting revenue to be flat to up only 2% for the first quarter, which falls short of some analysts' estimates. UBS Warburg, for example, expected revenue to increase 3% in the first quarter. "You just see a lot of projects postponed" due to the economy, says Zeus Kerravala, an enterprise analyst for Detwiler, Mitchell, Fenton & Graves. "People are trying to get a better handle on what inventory they have, how to make the stuff that they have work better vs. buying new stuff." Kerravala believes users are waiting until after the election season to re-examine their network investments. "There's just a lot of caution," he says. "The uncertainty of what people are seeing in the economy right now, and an election coming up, has just made people a lot more cautious. It's safer to make no decision than a wrong decision." Cisco didn't make many wrong decisions in the fourth quarter. The company recorded net sales of $5.9 billion, compared with $4.7 billion for the fourth quarter of fiscal 2003, an increase of 26%. Revenue was up 5.4 % sequentially. Pro forma net income was $1.5 billion, or 21 cents per share, a penny better than the 20 cents per share analysts were expecting. This compares to net income of $1.1 billion, or 15 cents per share, for the fourth quarter of fiscal 2003, and net earnings of $1.4 billion, or 19 cents per share, for the third quarter of fiscal 2004. RELATED EDITORIAL LINKS Cisco has 'record-breaking' quarter Network World Fusion, 08/10/04 http://www.nwfusion.com/news/2004/0810ciscoearn.html Cisco breaking news http://www.nwfusion.com/news/financial/cisco.html IDC: IT spending to increase 5% in 2004 IDG News Service, 03/31/04 http://www.nwfusion.com/news/2004/0331idcitsp.html _______________________________________________________________ To contact: Jim Duffy Jim Duffy is managing editor of Network World's service provider equipment coverage <http://www.nwfusion.com/edge/>. He has 18 years of high-tech reporting experience, including over 12 years at Network World. Previously, he was senior editor at Computer Systems News and associate editor/reporter at Electronic News and MIS Week. He can be reached at <mailto:[EMAIL PROTECTED]>. _______________________________________________________________ This newsletter is sponsored by Dupont(TM) In the event of a fire, securing your business uptime is critical, introducing DuPont(TM) certified limited combustible cable. To learn more, read the DuPont(TM) whitepaper now, Limiting the Plenum Cable Fire Risk, no registration required. http://www.fattail.com/redir/redirect.asp?CID=72584 _______________________________________________________________ ARCHIVE LINKS Archive of the View from the Edge columns: http://www.nwfusion.com/edge/columnists/index.html _______________________________________________________________ Guide to effective data protection: Proven backup and recovery automation for PCs Over 50% of the average employee's work data exists only on that employee's computer. What if it were lost due to a virus strike or laptop theft? 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