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Cisco’s CEO Says Customers Plan to Boost Tech Spending in 2004

From Reuters

Cisco Systems Inc.'s chief executive said Wednesday that corporate customers were slightly boosting their information technology spending plans for 2004.

“We are seeing the customers in the enterprise [sector] start to budget, for the first time in several years, slightly up,” John Chambers said at the company’s annual analysts’ meeting in Santa Clara, Calif. “That’s often in the low- to mid-single-digit numbers” for capital spending.

“At least CEOs are taking their foot off the brake and are headed toward the gas pedal,” he added.

Investors tend to see Cisco, the world’s largest maker of gear that directs Internet traffic, as a benchmark for corporate and government spending because about 75% to 80% of its sales come from those customers. Cisco said last month that sales in its current quarter, its fiscal second, would rise as much as 3% from the previous quarter.

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“In terms of confidence, make no mistake about it, it’s improving,” Chambers said.

The CEO, who said his comments should not be interpreted as a forecast of Cisco’s financial results, added that the areas of interest for spending by customers next year include Internet voice transmission, storage, security, networking, personal computers and servers.

Chambers said the San Jose company’s goal is for sales-per-employee growth of “10% to 15% a year over the next three to five years.”

Cisco also said Wednesday that it would offer a new version of its high-end routers -- devices that direct data on networks -- that customers could upgrade instead of replace. The products are designed to save telephone companies money and headaches.

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Analysts said the products would allow Cisco to keep pace with Juniper Networks Inc. and other smaller rivals as it developed its next-generation router, expected next year by many people on Wall Street.

Cisco shares gained 55 cents to $23.78 on Nasdaq.


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