Cisco Service Provider Sales Slip 20%

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Cisco Systems said service provider revenue worldwide dropped 20% in the most recent quarter -- and fell about 30% in the U.S. -- as cable and telecom customers cut spending.

Cisco CEO John Chambers, on the company's earnings call Wednesday, said its biggest service provider customers in the U.S., which include Comcast, Time Warner Cable, Verizon Communications and AT&T slowed their spending for the quarterly period, which ended Jan. 24.

"They kind of took the foot off the gas pedal for a period of time," Chambers said. "Didn't hit the brakes, but [they] sure as heck weren't accelerating."

At the same time, Cisco's video systems revenue grew 18% and it became
the largest advanced technology in terms of quarterly revenue, according to Chambers.

Compared with enterprise and consumer segments, "service provider budgets are the ones probably over the long run I am most comfortable with because those networks are going to load up videos," he said. "We are getting closer to the service provider customers and they are looking at new revenue opportunities and how we help them monetize the loads that are occurring on that and I think we are positioned very well."

Overall, Cisco reported net sales of $9.1 billion (down 7.5% year over year) and net income of $1.5 billion (down 27.0%) for the quarter. The company does not report financial results by business segment.

Chambers also said on the call that the company may cut 1,500 to 2,000 jobs this year, or between 2.2% and 3.0% of its work force, as part of ongoing cost-reduction efforts. At the end of the quarter Cisco's headcount was 67,318.

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