What a difference a week makes. Just when Chris Dedicoat, Cisco's European operations chief,assured everyone that Cisco wasn't impacted by Europe's debt crisis, the company went into thatfour to five week swoon that dampened its Q4 and prospects for Q1, 2011, and sent the stock and the markets tumbling.
You may recall that back just before mid-June, Dedicoat reassured investment firm UBS that all's well with Cisco's business in Europe. Europe, it turns out, actually helped soften Cisco orders between mid-June and mid-July, leading toa Q4 that missed revenue targets, disappointed Wall Street and prompted Cisco to issue a first quarter 2011 forecast that beat down its and everybody else's stock.
Cisco lost 10% yesterday; even Juniper was down 7% on the disappointing Cisco results and guidance. CEO John Chambers called out Europe specifically, while noting the corresponding downturn in global markets, when he reflected on the early summer dip in orders.
Now Dedicoat says European customers, which account for 22% of Cisco's revenue,are "nervous."But both he andChambers, naturally, are putting the best lighton the quarter and on Q1: 27% growth for a $40 billion company is pretty good, they say, and at the high-end of guidance they provided in Q3; and 18% to 20% growth in Q1 ain't to shabby either given that Cisco's long range goal is 12% to 17% annual growth.
And in things that Cisco can control, it's hitting the ball out of the park, the executives say. It's the things it can't control - like customer hesitation - that throw the company off course.
Cisco prides itself on setting it sights on the long-term. Indeed, both Chambers and Dedicoat stressed that the Q4/Q1 matter is a short-term blip.
But perhaps some short-term foresight - just a week of it - might have saved Cisco from admitting some face-reddening hindsight on its European business.
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