Cisco shares fall on economy worries, downgrades

NEW YORK (Reuters) - Shares of Cisco Systems Inc (CSCO.O: Quote, Profile, Research) fell 3.5 percent on Wednesday after CEO John Chambers told Reuters many of his customers see the economy picking up early next year rather than this year, and brokerages cut their price targets on Cisco shares.

"Most customers still see the turn probably late this year or early next year. More of them looking toward early next year," the chief executive of the top network equipment maker said in an interview on Tuesday.

In late May, Chambers had said that based on his conversations with customers and economic leaders, the most likely scenario would be for the economy to start picking up toward the end of this year.

RBC cut its price target on Cisco to $27 from $29, and UBS cut its target to $25.50 from $27.

JP Morgan analyst Ehud Gelblum found Chambers' remarks to be "punctuating our dour outlook and indicating no improvement in the near term."

While Gelblum maintained a "neutral" rating on the shares, he lowered his estimate for Cisco's revenue growth for the first half of fiscal 2009 to 9 percent from 11 percent.

Cisco shares fell 80 cents to $22.08 on the Nasdaq.

(Reporting by Ritsuko Ando; editing by John Wallace)