Cisco Wakes Up to Tough Times
Cisco (CSCO) is always the last to know about slowing growth in tech.
After reporting in-line second-quarter numbers late Wednesday, CEO John Chambers cited a "challenging" January, with the weakness coming from the U.S. -- and now Europe.
Shares of Cisco were recently off 69 cents, or 3%, to $22.39.It took a nasty downturn in orders last month before Cisco realized that all this talk about a credit crunch and a looming recession was dramatically shaping its customer's spending plans. And while the tightening budgets in tech blindsided Cisco, investors were already bracing for a slump. Cisco's shares have dropped by a third in the past three months. Still, optimists held out hope that Cisco's broad exposure across multiple product lines like video and data storage, as well as business in fast-growing developing markets around the world, would help offset any areas of specific sluggishness. That scenario didn't hold up well, however. "Cisco no longer appears to be the safe haven to weather the economic storm that we had thought it was," wrote JPMorgan analyst Ehud Gelblum, who cut Cisco to neutral from buy Thursday. Cisco watchers note that Chambers has a bad track record for predicting negative trends. When all signs pointed to a collapse in the Internet-building boom at the end of 2000, Chambers was
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