Cisco moves worry, but forecasts strong

Word of the Cisco slowdown curb the technology race in the markets, but the results of Lenovo and the outlook for the mobile electronics market, online and consumers suggest that the recovery from recession has yet legs.

Cisco makes its quarterly earnings report Wednesday after the market close, and Thursday of technology-oriented Nasdaq closed down by 23 points to 2,555. The broader Dow closed down by 73 points at 11,283. Cisco shares closed down by the U.S. $ 3.97 to $ 20.52, losing about 16 percent of its value as the networking giant cross near its 52-week low of $ 19.82.

The shares continued to fall broadly in the morning, not only to punish the Cisco IT vendors, but have had big gains. One hour after the opening bell on the markets, shares of Cisco fell $ 0.17 to $ 20.36. Apple, which recently reported record sales and income, fell by $ 1.64 to $ 314.98. Microsoft, which recently reported its best ever September quarter, down $ 0.17 to $ 20.36.

On the surface, Cisco had a good quarter, with revenue reaching 10.75 billion U.S. dollars, about 19 percent year on year, while profit rose 13 percent to $ 1.9 billion, or $ 0.34 per share .

But the company also forecast revenue growth of 3 percent to 5 percent for the current quarter and sales increased from 9 percent and 12 percent for the fiscal year. That is well below the oft-repeated goal of the company increases sales by 12 percent and 17 percent. Cisco blamed mainly to a slowdown in spending by the government. In the U.S., government agencies are being hit as stimulus spending dries up.

On Thursday, IDC had some mixed news on PC shipments worldwide microprocessor unit and revenue in the third quarter. Although shipments and revenue rose 8.6 percent and 24. 1 percent, respectively, a year, rose only 2.1 and 2.5 percent respectively, from the second quarter of this year. The usual increase from second to third quarter is 10.6 percent of shipments and 9 percent of revenues.

The manufacturers seem to be hyper-sensitive to the fragile economy. “Original equipment manufacturers have become very reactive to any hint of weakness in final demand,” said analyst Shane Rau said in a statement.

On a positive note, IDC has issued a positive prognosis, saying that while the desktop hardware demand in developed countries is delayed, the companies spent on computer upgrades and as a result, the PC market growth should be two digits next year.

China-based computer maker Lenovo, the computer manufacturer fourth largest in the world, for its part announced a strong quarter on Wednesday. Profit for the quarter ended Sept. 30 rose 44 percent from a year earlier to 76.59 million U.S. dollars, while sales rose 41 percent to $ 5,760,000,000. Lenovo A statement expressed “cautious optimism” over the next quarter and said the company is looking for acquisition targets.

Defying concerns about, among other things, the fear of a relapse into recession, worldwide PC sales continued to expand in the third quarter, up 7 percent sequentially and 10.3 percent compared the previous year, iSuppli market research, said recently. Worldwide PC shipments in the fourth hit 88,100,000 units, iSuppli said.

“Even with consumer confidence shaken by the austerity measures the government, individuals and businesses are buying PCs in the third quarter,” wrote Matthew Wilkins, principal analyst at iSuppli. The company said that PC sales continue to grow in the fourth quarter, with an average increase in single digits year-over-year.

Other market reports this week were positive, thus:

– Global sales of mobile phones to end users totaled 417 million units in the third quarter of 2010, a 35 percent increase year over year, according to Gartner. Smartphone sales grew 96 percent in the third quarter of last year, and smartphones accounted for 19.3 percent of total mobile phone sales in the third quarter of 2010.

“Smartphone OS providers have entered a period of accelerated evolution of the platform, driven by more regular product launches, new platform operators and new types of devices,” analyst Roberta Cozza said in a statement. By 2010, Gartner expects overall mobile handset sales to increase more than 30 percent each year.

– Cisco Despite problems with public spending, CDW IT Monitor – an indicator every two months from the integration of systems – found that 86 percent of decision makers surveyed IT governance provide for the replacement or installation software in the next six months, an increase of nine percentage points since August 2010 and a record since the start of the IT Monitor in December 2007, before the fall of Wall Street in September 2008.

– Forrester projects online holiday sales to hit nearly $ 52 billion in November and December, a 16 percent increase year on year. Consumers are showing a willingness to spend this season, according to Forrester. Eighty-seven percent of online shoppers with household incomes over $ 100,000 say they will spend the same or more this year compared to last year, while only 13 percent say they will spend less.

Regarding the type of market observers if the problems affect other vendors Cisco, the confidence of buyers will have an important role in how sales of IT and quotas, tariffs. For most of the third quarter, shares dipped as concerns about a double dip recession hit investor confidence. But the sector began to lead the market in September, prompting a broad market rally, but October and renowned suppliers reported strong profits. The strong fourth-quarter sales would go a long way toward maintaining high confidence.