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Cisco CEO Sees No Improvement in Grim Near-Term Outlook

March 14, 2001|From Associated Press

NEW YORK — Business is weakening in Asia on top of a severe U.S. slowdown, according to another bleak update from Cisco Systems Inc., the network equipment maker most emblematic of the technology bull market's woes.

Chief Executive John T. Chambers told investors Tuesday at the Merrill Lynch Global Communications Conference that conditions haven't improved from the sharp downturn Cisco experienced in January and said the near-term outlook still is grim.

Chambers didn't officially lower his company's forecasts as he did in January. At the time, executives said revenue could fall as much as 5% in its current fiscal third quarter--the first decline in its 11-year history as a public company.

"We have seen the same slow growth in orders in the first six weeks of this quarter that we saw in January," Chambers said. "It's becoming more challenging, especially in the Asia-Pacific region," he said, adding that there also are signs of sluggishness emerging in Latin America and Europe.

The San Jose-based company already is taking steps to counteract the slowing economy. Late last week, Cisco unveiled plans to cut as many as 5,000 of its full-time employees--about 11% of its regular work force--and as many as 3,000 temporary and contract workers.

The remarks from Cisco, widely popular among investors, come amid a frightening free-fall in the Nasdaq stock market that has wiped out more than two years' worth of hefty gains. Cisco is 75% off its 52-week high; its shares rose $2.56 to close at $21.38 on Nasdaq.

Chambers said Cisco, the world's biggest supplier of equipment for building the Net, remains confident about long-term demand for online services and network capacity, standing by long-term growth projections of 30% to 50% in revenue.

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