Cisco Girds for Tough Economy in 2009

The analyst nonetheless maintained his 'neutral' rating and a $19 price target.

Piper Jaffray analyst Troy Jensen also mentioned the global economic slowdown and limited visibility into service provider spending as major hurdles for Cisco. Jensen reiterated his buy rating for Cisco in a note Thursday and lowered the company's price target to $21 from $24.

The troubled guidance from Cisco, which competes with telecom manufacturers Alcatel-Lucent (ALU Quote) and Nortel (NT Quote) and networking companies Juniper (JNPR Quote), F5 (FFIV Quote) and Riverbed (RVBD Quote) offers an insight into the true scale of the IT spending slowdown.

"Comments regarding a massive order slowdown in October are negative for the data networking industry," wrote Oppenheimer analyst Ittai Kidron, in a note, adding that this could pose challenges to Juniper, F5, and Riverbed.

Despite its current problems, Cisco was bullish about its long-term prospects during its conference call. Chambers reiterated the company's commitment to a long-term growth rate between 12% and 17% and said the company had around $27 billion in cash and investments at the end of the first quarter.

The CEO added that Cisco has around $7 billion available for share buybacks, after spending around $1 billion repurchasing shares during the first quarter.

Faced with an increasingly difficult economy, Cisco will likely pare back its share repurchases, said JP Morgan analyst Ehud Gelblum.

Gelblum said Cisco's first-quarter stock repurchase was below the $1.4 billion the company spent on buybacks in the prior quarter. "We suspect Cisco is hoarding cash, since no one really knows just how bad the global slowdown could be," he wrote, in a note released Thursday.