Cisco strikes cautious tone, results beat view

By Ritsuko Ando

NEW YORK (Reuters) - Cisco Systems Inc (CSCO.O) offered a cautious outlook on the economy on Tuesday after posting quarterly earnings that topped expectations as rising Internet traffic fueled demand for network equipment.

Chief Executive John Chambers was comfortable with Cisco's long-term growth target and gave a current quarter revenue forecast in line with analysts' estimates, even though he noted that U.S. and European customers remained cautious.

"We are seeing some orders slide out and that's what normally occurs during a little bit more challenging economic times," Chambers told analysts on a conference call. "Overall I wouldn't say yet that there's a turn. I'd say it feels pretty steady in terms of the business momentum."

Chief Financial Officer Frank Calderoni also urged Wall Street to "model on the conservative side due to macro-economic challenges," after forecasting 9 percent to 10 percent revenue growth for the current quarter. The average analyst forecast was for 9.1 percent revenue growth, according to Reuters Estimates.

Cisco shares were up about 1 percent in extended trading, after gaining as much as 3 percent immediately following the results for its fiscal third quarter ended April 26.

The company, which makes router and switches that direct Web traffic, said its quarterly net profit fell to $1.8 billion, or 29 cents a share, from $1.9 billion, or 30 cents a share, in the year-ago quarter. That included an acquisition related charge of 4 cents per share.

Quarterly earnings, excluding items, rose to 38 cents from 34 cents a share, beating the average analyst forecast of 36 cents according to Reuters Estimates.

"Usually Cisco beats by a penny. They beat by two pennies. That was better than the norm," said Robert W. Baird & Co analyst Kenneth Muth. "Global service providers kind of carried the day. The downside of service providers is they're big and lumpy in orders so they're not as predictable as enterprise."