Cisco Systems Inc. (CSCO) announced results for the third quarter that were marginally above expectations but, nevertheless, the price of the stock slid by about 8% on the announcement. This can be attributed to the disappointing earnings forecast for the fourth quarter, concern about global technology spending and apprehensions about the ability of the company to handle prolonged economic weakness. On top of several quarters of disappointing growth, the forecast of revenue growth in the fourth quarter was an increase of between 2% and 5%. This growth would translate into total revenues of between $11.4 billion and $11.8 billion short of the consensus estimate of $12 billion. Estimated earnings per share were between $.44 and $.46 a share short of consensus estimates of $.49 a share. All this has clouded the fact that Cisco has turned in a solid performance for the third quarter based on US demand and gains in the market for switches and routers which offset weak public spending and problems in the eurozone. CEO John Chambers said “We are successfully executing against our long-term strategic plan of growing profit faster than revenue,” and described the earnings report as “solid.”.

Net earnings at $2.6 billion were up 20%. Total revenues for the third quarter rose by 6.6% from the previous year to $11.59 billion compared to a consensus estimate of $11.58 billion. There was a 5% jump in the core business of network switching. Growth in developed markets was slow the growth in emerging markets including Russia was 12%.To continue reading, click here.