Cisco APAC boss warns of continuing downturn

Cisco APAC boss warns of continuing downturn

The market slowdown is going to continue for longer than anyone had initially thought, warned Gordon Astles, Cisco senior vice president, Asia-Pacific, during his keynote address at Cisco's Networkers conference in Brisbane today.

With reports coming from the US overnight that Nortel Networks had yet again lowered earnings expectations for calendar Q1 2001, Astles confirmed that Cisco would endure a third quarter of negative growth.

"We were originally hoping [negative growth] would be two quarters but now we're seeing three quarters at least," said Astles.

Astles skirted around the issue of whether the current situation constituted a recession but did go so far as to suggest it has blindsided a company so used to patting itself on the back.

"For us to forecast that the quarter we are currently in, Q3 fiscal 2001, is the first time we are going to have negative growth quarter over quarter since the company's inception in 1986, means something is happening out there," he said.

Quoting Cisco CEO John Chambers, Astles confirmed what many had known for some time: "We expect this [downturn] to be deeper and longer than originally anticipated."

"It is our expectation that it [the economy] will bounce back, but the effect on the stock market has been nothing short of tragic for a lot of people," he added.

As the market continues to constrict, Cisco expects to see an average growth in the industry, in line with market analysts' figures of around 8 per cent. However, this is down drastically from the 33 per cent growth rate the market was expected to be showing at this point in the year.

Astles did his best to allay fears of Cisco partners and customers, claiming that in tough times the market inevitably turns to the biggest player and with a cool $US20 billion in the bank, Cisco is still a safe bet.

Meanwhile, Nortel announced that its results for calendar Q1, 2001 are expected to be well below its previously stated earnings. Nortel is hedging its bets with a revised statement of revenues between $6.1 to $6.2 billion, down from its previous revised estimate of $6.3 billion. [Note: sounds like not much but this is in billions of dollars revenue -- imagine what that means in millions and then take away operating costs to get profits].

While Nortel announced significant staff cuts of 10,000 people worldwide last month, the company does not expect to see the benefit of these savings until well into the next quarter, a company statement said.

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