Cisco CEO expects industry comeback

During an analysts meeting, CEO John Chambers said he's optimistic about the tech industry's future, but he would not disclose second-quarter financial projections for the company.

During a meeting with analysts on Tuesday, CEO John Chambers said he's optimistic about the tech industry's future, but he would not disclose second-quarter financial projections for the networking giant.

Although avoiding the major question of the day, Chambers did say he expects a "turnaround" from the current economic woes battering the markets but at a pace perhaps slower than the company had hoped.

"Will there be a recovery? Yes," Chambers said after his presentation to analysts. "But at what speed is what everyone is concerned about."

Cisco Systems had previously said that the quarter's revenue would either be the same as the first quarter or down between 3 percent and 4 percent.

Chambers' speech kicked off two days of presentations to the financial community about the company's expectations and strategies for the coming year. A day before, RBC Capital Markets analyst John Wilson downgraded Cisco, saying that smaller companies selling less-expensive gear, and delays in a global economic recovery, will take their toll on the company.

The slow economic recovery has affected nearly every sector. But technology providers such as Cisco are being hit hard with a decline in company spending on networking equipment.

To fight its way out of the slump, Cisco has focused its energy on entering new markets such as storage networks, which allow every computer in a company to be backed up with a networked set of storage drives. Research firm Gartner Dataquest estimates that the market for so-called storage area networks (SANs) increased 13 percent last year to $1.46 billion.

Chambers said in his presentation that SANs were among the "most exciting" new areas for Cisco.

Cisco is a relative newcomer to that market. The company in August announced plans to purchase privately held Andiamo Systems in a deal worth as much as $2.5 billion. Cisco is expected to debut a new line of products based on Andiamo's equipment by year's end. Brocade Communications Systems remains the market leader in SANs, accounting for 34 percent of sales, followed by McData and Emulex, according to Gartner.

Chambers said Cisco wants to increase its earnings by selling new technologies and consulting existing customers on what kinds of services and products to buy. "We really want to make huge progress in that," he said.

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