Cisco Systemsreported a profit and revenue that beat Wall Street forecasts, but the company said it expects year-over-year sales to fall in the current quarter.
Excluding one-time items, the networking equipment maker said it earned 32 cents a share in its fiscal second quarter, down from 38 cents a share in the same period last year.
A consensus estimate of analysts who follow Cisco put the company's profit at 30 cents a share, according to Thomson Reuters.
But Cisco said that incoming orders declined dramatically in January, indicating that the shrinking economy has more pain in store for the industry.
Chief executive John Chambers said the company, the world's largest maker of computer networking gear, saw progressively fewer orders as its latest quarter progressed. In November, orders were down 9 percent from the year before. In January, the drop was 20 percent.
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Chambers projected a 15 percent to 20 percent drop in revenue in the current quarter. That would put revenue at $7.8 billion to $8.3 billion, below the average estimate of $8.7 billion projected by analysts.
Cisco shares fell almost 4 percent in extended trading after initially rising after hours. The stock rose 1.4 percent to $15.84 during the regular session on the Nasdaq.
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Sales for the most recent quarter hit $9.09 billion, a decline of 7.5 percent from $9.83 billion this time last year. Analysts were looking for a topline of $8.998 billion. Cisco attributed the sharp drop in quarterly revenue the the economic downturn, which is forcing companies to cut back on technology spending.
The world's largest maker of computer networking gear said it would accelerate its move to cut costs in the face of the economic downturn. Since its fiscal second quarter ended Jan. 24, nearly a month after other technology companies, its report will be scrutinized for market trends in the new year.
Cisco's fiscal second quarter ended Jan. 24, nearly a month after other technology companies that have reported their quarterly results recently. That means Cisco's results provide a window into future reports from the rest of the industry. Cisco is also sensitive to trends in the market because more than 80 percent of its revenue is from sales, rather than recurring service contracts.
- AP contributed to this report.