BUZZKILL: A gloomy outlook from Cisco Systems Inc is shaking some investors' faith in the strength of the technology industry's recovery. - AP
SAN FRANCISCO: A gloomy outlook from Cisco Systems Inc is shaking some investors' faith in the strength of the technology industry's recovery.
Corporations have loosened their purse strings after slashing their budgets. Some governments have poured money into stimulus-fuelled technology projects. Consumers are starting to snap up cellphones and gadgets again after backing off in the past few quarters.
But Cisco revealed severe slowdowns in spending by state and local governments in the United States and by governments in Japan and Europe. That has investors worried that other companies will show similar trends when they report their next earnings.
Cisco is a soothsayer of sorts for the technology world because it is the world's No 1 maker of computer networking equipment, and its quarterlyresults lag others' by a month, meaning it includes an extra month of sales that most other companies haven't reported yet.
Cisco's stock got clobbered yesterday, and investors lopped off a sixth of Cisco's market value, annihilating US$23bil (RM74bil) in shareholder wealth. The sell-off drove the tech-laden Nasdaq down, too.