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February 6, 1997updated 05 Sep 2016 1:00pm

CRISIS, WHAT CRISIS? SAYS CISCO

By CBR Staff Writer

Cisco Systems Inc is assuming dominance of Intel Corp and Microsoft Corp proportions in the networking equipment market (CI No 3,093), and has no doubts that the torrid pace of growth it and the market have enjoyed is set to continue. We see a very good market at 30% to 50% growth for the forseeable future chief executive John Chambers told Reuters in an interview after a conference call with analysts in which he repeated Cisco’s goal of outperforming the market’s growth. Net profit for the second quarter jumped nearly 62% to $339.5m and sales soared 73% to $1.59bn. Cisco has been at the forefront of the frenetic acquisition chase in the networking equipment business, but if anyone is expecting that to moderate, think again. Chambers said Cisco expected to acquire another 10 to 12 companies in its current year. Almost every market segment has opportunity for internal products, joint development projects with our partners and acquisitions, he told Reuters. Analysts confirmed that Cisco executives in their conference call had addressed concerns over a possible slowing in the market, sparked by comments attributed to 3Com Corp, and several said they saw no sign that any December sluggishness observed by 3Com had a major impact on Cisco’s business. Chambers said a shortening of order lead times – down to one to three weeks now from eight to 12 weeks previously – meant that quarterly shifts in results may be more pronounced. A second quarter gross margin of 65.3% surprised some analysts who had been expecting price competition to cut into margins, and makes it clear that Compaq Computer Corp’s campaign to make the market much more competitive is so far having little effect. Our overall guidance is that over time, margins will continue to go down, Chambers said.

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