Cisco CEO Says Global Economy Is 'Strongest' He's Seen
Cisco Systems Chief Executive John Chambers told CNBC Wednesday the global economy is the strongest he's seen, even though the next quarter or two "maybe a little bit bumpy" in the U.S.
"It’s the strongest global economy I’ve seen in my career," Chambers said Wednesday, in an interview on CNBC's "Squawk on the Street." He cited the growth the company has seen in Asia, Europe and emerging markets to back up his opinion.
Cisco shares jumped to a six-year high on Wednesday after the network equipment maker turned in a solid performance in its fiscal fourth quarter, and raised its long-term growth forecast, citing demand for its network equipment hardware as well as other products.
In the interview, Chambers said the company was seeing revenue growth above 15% in 23 of its top 30 countries.
As for the U.S. market, Chambers said he expects credit concerns, which have wrangled markets in recent weeks to work itself through the system in the next three to four months as long as people remain calm.
“I’m not an economist, but I talk to a lot of customers and a lot of financial people, and the way that I would summarize it in terms of what we are hearing is: most people believe the U.S. economy is going to grow fine - 2% plus growth for the second half of the year going into next year," he said. "When you have a bubble, it’s better to let the air out of the balloon earlier rather than later."
After the market closed Tuesday, the San Jose, Calif.-based company said its adjusted earnings per share rose to 36 cents from 30 cents a share in the year-ago quarter. Sales rose 18% to $9.4 billion. Analysts surveyed by Thomson predicted earnings of 35 cents a share on revenue of $9.3 billion.
The company also raised its long-term revenue growth target to between 12% and 17% growth year-on-year, from a previous range of 10% to 15%.
Despite the strong growth, Chambers said he had no plans to start paying Cisco shareholders a dividend.
"Will we eventually pay a dividend. Yes," he said. "But I think it's a much more effective use of our funds to be repurchasing stock at this time and for acquisitions."
According to Chamber, the company's stock repurchase plan has helped to accelerate the company's earnings per share growth, and assisted in the company's stock appreciation.
Cisco shares are currently trading at their highest level since Feb. 2001.