Cisco warns of waning profits

Cisco's fourth quarter profits may undershoot Wall Street forecasts as demand for computer networking equipment continues to wane.

Analysts believe current sales projections for the internet infrastructure industry are too optimistic, with revenues expected to fall a steeper 15% year-on-year compared to previous estimates of an 11% decline.

Paul Sagawa, of Sanford Bernstein said recent profit warnings from telecom equipment maker Nortel and fiberoptics group JDS Uniphase suggest that the industry is around 18 months away from any recovery - a slump, he warned, which Cisco may not be able to insulate itself from.

He said: "We believe that most equipment vendors will be forced to pre-announce poorer-than-expected sales and losses this quarter

"In particular we believe that even Cisco (is) at risk of failing to achieve consensus expectations for this quarter and the rest of the year."

According to First Call consensus estimates, Cisco is expected to post profits of 2 cents a share in the three months to July.

Earlier this month, Cisco Systems has announced it will sell RealNetworks' internet broadcasting software alongside its own products.

The company said RealSystem iQ, a set of products for streaming audio and video online, will be offered to its corporate clients.