Cisco Systems President and Chief Executive John Chambers said Wednesday he expects larger U.S. companies are being a little cautious due to nervousness about the economy. However, he sees growing demand for his companies' products elsewhere.
“I think if you look at big (U.S.) companies they are being a bit cautious because of nervousness about the economy,” Chambers said, in an interview on CNBC's "Squawk on the Street."
“The commercial market, which tends to spend as long as their businesses are spending, was very good globally," he said. "And candidly, enterprise was very strong outside the U.S. So I think what you see is a company that was well-balanced.”
Still, Cisco shares fell sharply on Wednesday as investors reacted to Cisco's sales forecast, which wasn't as strong as some investors had hoped. Recently, Cisco shares were down more than 5%.
Shares of the San Jose, Calif., communications and had risen more than 10% in the past few weeks as investors expected a strong fiscal third-quarter. Although Cisco's results did top analysts expectations for the third quarter, its fourth-quarter sales forecast for sales of $9.2 billion to $9.3 billion was lower than expected.
In his interview with CNBC, Chambers was optimistic about the company's prospects, noting the strong growth the company is seeing for many of its key products. Also, Cisco expects a new growth period is beginning on the Internet that will be a large opportunity for his company.
“There’s a second phase of Web growth just about to occur” he said. Chambers explained that the first phase of Internet growth was about transactions such as ordering goods and services online. He expects the next phase will be about collaboration.
“It will make the first phase, in my opinion, look small, and it will include video in a big way,” he said.
“We are extremely optimistic about what this means for Cisco internally, as well as what it means to our customers,” he said.
Cisco has also been expanding into consumer video, as seen in its acquisition last year of cable set-top box maker Scientific-Atlanta.
In a separate interview, on CNBC Asia, Chambers said that Cisco has plans to use acquisitions to enter new markets, especially in the area of unified communications.
"You'll see a lot of competitors in our market, some traditional, some not, and that's actually very healthy," he said. "We focus on market transitions, we think there are a lot of them going now, and we think we're positioned very well," Chambers added.
After the market closed on Tuesday, Cisco reported its third-quarter profit rose 34% as widespread networking upgrades continued to fuel the company's robust growth. Excluding one-time charges, the company earned 34 cents a share, a penny higher than analysts surveyed by Thomson Financial were expecting.
Cisco rang up $8.87 in billion in sales during the quarter, higher than the $8.76 billion analysts were anticipating.
Expectations of a good report from Cisco may have risen on Tuesday after another technology heavyweight, Hewlett-Packard , raised its forecast for second quarter revenue and earnings to above Wall Street targets.
The disappointment over Cisco's forecast weighed on technology stocks on Wednesday.