Cisco’s growth fueled by network upgrade orders

Cisco Systems Inc. said Friday that orders continued to pick up as customers upgraded their computer networks, easing concern about an economic slowdown.

Clients of Cisco, the world’s biggest maker of computer-networking equipment, are in the “early phases” of an upgrade cycle, Chief Development Officer Charlie Giancarlo said. The San Jose-based company also is benefiting from growth in emerging markets and Europe, he said.

“We’re seeing good economic growth overall,” Giancarlo said. “The small and medium-sized business market has been a constant grower for us. It seems to be somewhat immune to swings in the economy.”

Cisco Chief Executive John Chambers said in February that the company’s sales were growing at the top end of its expected range of 10% to 15%.

Giancarlo’s comments soothed investors after reports on rising inflation and a slowdown in the housing market sparked concern that growth could stall.

Shares of Cisco rose 71 cents Friday to $26.68.

“There’s been some nervousness out there about spending and demand,” said Inder Singh, a Prudential Equity Group analyst. “It’s good for them to come out and sound optimistic.”

More than a quarter of Cisco’s revenue comes from small and medium-sized businesses, where sales are growing faster than in the large-business market, Giancarlo said.

Many of those smaller companies aren’t public and don’t worry about investor reaction to spending increases, he said.