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Cisco 1Q Revenues Meet With Mixed Reviews

Cisco is looked to as a beacon in the technology industry for predicting future trends. For the 1Q ended October 30, Cisco posted an increase in net income of 13%, not bad. However, forecasted revenues for 2Q are lower than analysts’ predictions. This has caused a great deal of chatter and speculation in the industry. Sales from government sectors that are facing slashed budgets and cannot afford technology upgrades currently are a significant factor for Cisco. However, router revenue (up 13%) and switch revenue (up 25%) both posted increases compared to last year. And in Cisco’s data center segments, including both server and networking products, revenues soared to a 59% increase. Where is the industry headed? Simon Leopold of Morgan Keegan & Company Inc. predicts "The cable TV and non-federal public sector markets are unlikely to recover quickly yet healthy traffic growth and network evolutions bode for a recovery." And Cisco CEO John Chambers reports an increased interest in enterprise video collaboration over the past two quarters. CIO’s are “recognizing that video can help them improve productivity and change their business processes,” he said. Revenue for Cisco from collaboration products showed a 45% increase for the quarter. Overall, we feel it’s a lot of good news for the data communication industry.