Cisco Systems gave a cautious business outlook last night, although its quarterly results exceeded expectations as rising Internet traffic fueled demand for network equipment.
Chief executive John Chambers, considered a trend reader for the overall US technology industry, said conditions were still challenging and that a US market recovery is not in sight.
"We're continuing to see our US and some European customers remain cautious in their views about their own economies," he told analysts on a conference call.
His comments reined in Wall Street's optimism, and Cisco shares rose just 1 per cent in extended trading after gaining as much as 3 per cent immediately after the company announced its fiscal third-quarter results.
Cisco, the largest US makers of routers and switches that direct Web traffic, said earnings before items for the three months ended April 26 rose to $2.3 billion, or 38 cents, from $2.1 billion, or 34 cents a share, in the year-ago period.
Its quarterly net profit fell to 29 cents a share from 30 cents, due mainly to an acquisition-related charge of 4 cents per share.
Revenue rose 10.4 per cent to $9.8 billion, compared to its previous forecast 10 per cent growth.
Cisco forecast revenue growth of 9 to 10 per cent for the fourth quarter, compared with Wall Street's 9.1 per cent consensus estimate. However, Chief Financial Officer Frank Calderoni urged caution.
"We encourage you to model on the conservative side due to the continued uncertainty in the macroeconomic environment in the near-term," he told analysts.
And while Cisco reiterated its long-term revenue growth target of 12 per cent to 17 per cent, Mr Chambers said he was not sure when that pace of growth would return.
Mr Chambers also said he would remain alert to risks of US economic weakness spreading to other parts of the world. While the United States accounts for around half of Cisco's business, strong sales overseas, particularly in emerging markets, has been supporting its growth of the past year.