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Cisco's Job Shocker
washingtonpost.com Staff Writer Wednesday, May 12, 2004; 9:39 AM
Cisco's hiring spree "would represent the biggest surge in its workforce since the Internet boom," The San Jose Mercury News noted. The company already "added 214 employees during the most recent quarter, its first increase in workers in three years," the newspaper noted. CEO John Chambers insisted that "the new hiring would be selective -- in areas such as 'new technologies' and 'new opportunities in existing marketplaces.' He cited businesses such as computer security, video technology, data centers and Internet-based phone technology as likely candidates for more jobs."
The San Francisco Chronicle reported that "[t]o analysts, the decision to start hiring in significant numbers underscores the company's confidence. 'If he's going to add that many, you can bet he feels pretty good about their momentum,' said analyst Aalok Shah at Pacific Crest Securities."
The hiring news was announced late yesterday in tandem with the company's glowing third-quarter earnings report, which offered more hints that the tech economy is on the mend. "Most of our customer CEOs are beginning to be more optimistic not only about the economy, but also about their own industries and companies," Chambers said in a conference call yesterday, quoted by The San Jose Mercury News. More Chamber-isms, quoted in The Los Angeles Times: "'CEOs are becoming more optimistic about the economic direction and their own companies,' Chambers said. In turn, he said, 'I continue to be more optimistic than I was going into the last quarter.'"
The Merc noted Cisco's "quarterly profit rose 23 percent and sales jumped 22 percent over a year earlier as businesses spent more to upgrade technology. The results provided further evidence that tech spending has emerged from the economic downturn." The Financial Times struck a similar chord, saying Cisco's results "provided further evidence of a recovery in technology spending by announcing third quarter revenues and earnings ahead of Wall Street expectations."
The Wall Street Journal reported that Cisco's latest earnings mark "a sharp contrast to cautious comments made three months ago regarding demand for computer-networking equipment. Cisco, which tends to play down its own prospects, said it expects continued strong revenue growth in the current quarter, which ends July 31." And as for any Cisco naysayer worried with the company's newfound bullish approach, Chambers had this to say in an interview with the Journal: "We wouldn't be hiring if we didn't think the business opportunity outweighs the risks."
No Irrational Exuberance Here
While tech stocks traded up yesterday before Cisco's numbers were released, Wall Street indicated this morning that it is going to play hardball with the company. "Shares of Cisco Systems Inc. slipped 1.2 percent in pre-market trading on Wednesday on inventory concerns and mild disappointment with the company's outlook for its current quarter," Reuters reported. Cisco "shares fell 50 cents to $21.75 in after-hours trading on the news, released after the stock market's close. Cisco shares have dropped 10% since early April," USA Today said. "Some investors still expect booming growth from tech companies, and Cisco is too mature to deliver it, says CIBC World Markets analyst Steve Kamman."
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