As Cisco’s channel team gathers in Portugal to meet with media, downbeat financial news surfaced back in the states. Sure, Cisco’s latest quarterly earnings met expectations. But CEO John Chambers (pictured) warned that revenue could fall as much as 10 percent in the current quarter as the economic downturn spreads to Europe and Asia, Reuters reported. Time for The VAR Guy to pop sum Tums. Here’s why.
As a diversified IT giant (switching, unified communications, storage, security, etc.), Cisco tends to weather economic storms better than most of its nearest rivals.
But things are going from bad to worse with the broader global economy. Check out these highlights, er, lowlights from Reuters:
“We do believe that the challenges that initially affected the U.S. have spread to other countries around the world,” Cisco Chief Executive John Chambers said on a conference call, citing weakness in Europe, emerging markets and Asia.
Chambers also said that because of the dramatic changes in the market in the last two months it was difficult to be sure that the company would hit second-quarter revenue estimates.
“It’s probably the second most difficult time in my career in terms of my comfort level with the forecast,” he said.
Ouch. Every VAR and solutions provider should pause and re-read those quotes above. Don’t press the panic button but do managed your business and expenses wisely.
Keeping the Faith?
Despite the downbeat statements, there are reasons to keep the faith in Cisco. Some folks think Cisco risks losing its networking crown. The VAR Guy disagrees. Generally speaking, Wall Street remains impressed with the way Cisco manages expenses and drives sales — regardless of the macro economic conditions.
And if you think Cisco is in for a rough ride, imagine how the folks over at Nortel Networks and other struggling rivals are feeling.
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Reminder: When John Chambers talks, all of Wall Street listens.