Subject:  Cisco customers increasing 2004 spending |
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Date Posted: 19:14:26 12/10/03 Wed
(OFFICIAL) UPDATE 1-Cisco customers increasing 2004 spending
Reuters, 12.10.03, 5:15 PM ET
In SANTA CLARA, Calif., story, headlined, "UPDATE 1-Cisco customers increasing 2004 spending - CEO," in paragraph 7, please read ... goal for sales-per-employee growth ... instead of ... goal for sales growth. The company corrected Chambers' comments and said he should have referred to sales per employee and not overall sales.
A corrected version follows:
(Adds background on new router, other details, updates stock action)
By Ben Klayman
SANTA CLARA, Calif. (Reuters) - Cisco Systems Inc.'s chief executive said Wednesday that corporate customers are slightly boosting their capital spending plans for 2004.
"We are seeing the customers in the enterprise (sector) start to budget for the first time in several years slightly up," John Chambers said at the company's annual analyst meeting in Santa Clara, California. "That's often in the low to mid-single digit numbers for (capital spending)."
"At least CEOs are taking their foot off the brake and are headed toward the gas pedal," he added.
Investors tend to see Cisco, the world's largest maker of gear that directs Internet traffic, as a benchmark for corporate and government spending because about 75 percent to 80 percent of its sales come from those customers. Cisco said last month that sales in its current quarter, its fiscal second, would rise as much as 3 percent from the previous quarter.
"In terms of confidence, make no mistake about it, it's improving," Chambers said.
Chambers, who said his comments should not be interpreted as a forecast of Cisco financial results, added the areas of interest for spending by customers next year include Internet voice transmission, storage, security, networking, personal computers and servers.
He also repeated the San Jose, California-based company's goal for sales-per-employee growth of up to 15 percent a year over the next several years.
"Our goal as a company at Cisco is to grow 10 to 15 percent a year over the next three to five years," Chambers said.
Cisco shares were up 1.7 percent at $23.63 on the Nasdaq on Wednesday afternoon.
Cisco also said Wednesday it would offer a new version of its high-end routers, devices that direct data on networks, which customers could upgrade instead of replace. The product is designed to save telephone companies money and network upgrade headaches.
The new Cisco 12800 core router, which would be used on long-distance networks, and other new products are in testing and will be available starting in January, the company said.
Cisco officials are counting on the 12800 to help it maintain dominance as it allows customers to quadruple the capacity of existing Cisco routers without interrupting service.
Analysts said the products allow Cisco to keep pace with Juniper Networks Inc. and other smaller rivals as it develops its next-generation router, expected next year by many on Wall Street.
Competitors, however, said Cisco's 12800 router was a stopgap measure while it develops the next-generation router, and they see an opportunity to take market share.
Copyright 2003, Reuters News Service
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