Cisco shares tanked hard after hours on Wednesday following decent earnings and a mediocre outlook.
As is usually the case with the company, the bad news came on the conference call.
What specifically was the issue? According to CEO John Chambers, the public sector hasn’t even begun to drag on the economy.
In this latest quarter, despite talk of government retrenchment, CEO’s own sales to the public sector grew 9%. But pain is expected over the next several quarters. He specifically predicted a “rapid” decrease in discretionary public sector spending.
Obviously this has bigger implications for the economy as discussions swirls around the health of state and muni governments — partly from a muni bond perspective, but also due to general recession fears.
And that’s the worrisome point here, that one of the best bellwethers for public spending doesn’t even think the drag has hit yet.
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