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Technology firm Cisco more than halves revenue targets

September 15, 2011 | Hogan Keyser
Thursday, Sep 15, 2011 (BBC) - Technology company Cisco Systems has more than halved its revenue forecast amid slowing economic growth and increased competition.
Cisco said annual revenues would increase by between 5-7% over the next three years, down from a previous target of 12-17%.

However, Cisco said profits would rise by 7-9% during the same period.

Faced with tougher market conditions, Cisco started cutting costs in April, in a bid to boost profit margins.

Analysts said they expected the revenue figures to be cut, especially as global economic conditions had not improved as quickly as many people had predicted.

"Everybody knew the old targets were off the table. It's not a surprise, it's not as bad as it could have been," said Colin Gillis, an analyst at BGC Partners.

Cisco stocks rose 1.6% on Tuesday on the Wall Street following the announcement.

Moving ahead
Cisco has been a dominant player in the computer network market and has enjoyed double-digit growth for over a decade.

But it has seen increasingly stiff competition from companies such as Juniper Networks and China's Huawei Technologies.

In April, Cisco's chief executive John Chambers said that "bold steps" were needed to overhaul the company, which is the world's largest maker of computer networking gear.

The company decided to focus on its core business and has since shed almost 13,000 jobs, sold a manufacturing plant in Mexico and shut down its consumer camcorder unit Flip Video.

At Tuesday's annual analyst meeting, Gary Moore, Cisco's chief operating officer, highlighted 10 areas where the company was in the process of cutting or exiting, and 11 areas where it was reducing or delaying investment.

He said the company was refocusing on seven key areas: security, mobile internet, servers and access, network virtualisation, cloud-systems management, and software and tele-presence.

Mr Moore also announced a plan to speed up the time it takes to approve new deals.

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