Cisco Systems said today it expects weakness in the telecommunications and Internet service provider market to continue over the next 18 months as its customers struggle to get financing, control spending, and consolidate.
"We have a very challenging two to four quarters, possibly six, in the service provider space," Cisco Systems vice president of business development Mr Ammar Hanafi said at the Salomon Smith Barney Tech 2001 industry conference.
"There has been and will continue to be wide-scale consolidation taking place over the next 12 to 18 months," which will slow equipment purchases as customers merge," Mr Hanafi said.
Communications equipment makers such as Cisco have been hurt by a slowdown in spending by telephone and Internet companies in the weak economy.
"There is a bright spot here. We're beginning to see some selective capital being provided. If anyone is going to get capital today they've got to have an iron-clad business plan," Mr Hanafi said.
Cisco will focus on helping its service-provider customers cut costs in their business and raise revenues. The company is shifting more of its sales force toward the service-provider sector in an effort to bolster that business.
Cisco said it has not had to increase product discounts because many rivals have struggled with product and financial problems of their own, resulting in less competition.