Cisco exceeds expectations - just

Cisco Systems on Tuesday reported second quarter net earnings of 14 cents per share, slightly exceeding analyst expectations amid the continuing slump in corporate technology spending.

Net profit was $991m, or 14 cents per share, on revenue of $4.7bn. That compares with net profit of $660m, or 9 cents per share, during the same period in 2002.

Analysts believed Cisco, the number one maker of gear that directs internet traffic, would earn about 13 cents per share, according to a survey by First Call.

At the close of regular trading, Cisco shares were down 38 cents to $13.10 a share. The earnings report was issued after the close of regular trading.

In a statement, Cisco CEO John Chambers said the company managed to slightly exceed analyst expectations during "probably the most challenging environment the information technology industry has ever faced".

"From a global CEO and government leader perspective, we remain in a 'show-me' economy," Chambers added. "What I've heard from these leaders is clear: As their business improves, their investment priorities will centre on productivity."

In a conference call following the earnings report, Chambers said he expects more of the same in the next quarter, with revenue either matching the second quarter's performance, or down by 2 per cent to 3 per cent.

"CEOs will wait to spend until they see their own revenues pick up. I'm seeing more conservative attitudes among CEOs this quarter than a quarter ago," Chambers said.

Cisco's net sales of $4.7bn were in line with what Cisco had predicted. In November, Cisco said sales would be flat to slightly down. The second quarter sales figure is about 2.1 per cent lower when compared to net sales for the second quarter of 2002.