Cisco has predicted that it will have a current quarter profit below what the cocaine nose jobs of Wall Street predict.
It is blaming capital budget cuts at telecom service providers and weak sales in emerging markets.
The move is surprising because Cisco had previously expected better revenue and profit for the first quarter.
Chief Executive John Chambers said on a post earnings conference call with analysts that the service provider is the big challenge. Two to three US service providers have dramatically slowed the order rates with us, he said.
AT&T, the No. 2 U. telecom services provider, said last week that it would trim its 2015 capital spending outlook to $18 billion from $21 billion.
Cisco has also struggled with sluggish sales and increased competition in emerging markets. The company said sales in China fell by a third in the first quarter.
The US service providers are not buying. Revenue from US service providers dropped 18 percent, although sales from emerging economies declined six percent.
The company forecast adjusted profit of between 50-52 cents per share and revenue growth in the range of 4-7 percent for the second quarter ending January. Analysts were expecting a profit of 53 cents per share.
However the better than expected revenue and profit is still on, thanks to an increase in demand for its new high-end switches and routers.
Total revenue rose to $12.25 billion from $12.09 billion and Net profit fell to $1.83 billion from $2 billion a year earlier.
