Cisco earnings positive, but global IT spending slowdown still poses threat

Dive Brief:

Despite weaknesses in global IT spending, Cisco set a profit target in line with Wall Street expectations. But the company did cut targets three months ago.
The company said that some potential customers are placing project on hold, which threatens further IT growth, Reuters reported.
Cisco said it has struggled with data centers and switching, in products like networking and storage.

Dive Insight:

Cisco Chief Executive Chuck Robbins told analysts that customers put some projects on hold in January as the economy chilled, which some analysts said is not a good sign for the tech market.

“This was really a litmus test for all of IT spending,” said Sun Trust analyst Inder Singh told Reuters, referring to Robbins’ comments. “When they speak, and they talk about a slowdown, and a deceleration, usually it affects the broader market.”

Cisco said while demand for data centers and switching was down, demand for security and next-generation data centers was strong.

Earlier this week, industry analysts said companies are hiring fewer people and spending less on IT as the global markets continue to struggle amidst weak economic growth.