Cisco (CSCO) forecast more important than earnings

Cisco (NASDAQ:CSCO) did just fine in its last period. For the fiscal second quarter, the company reported a 7.2% increase in net and a 16.5% increase in revenue. Both numbers hit or bested forecasts.

But, it was Cisco's look into the future which troubled Wall St. Some sectors did unusually well. Emerging markets revenue moved up 44%.

The company did not post a robust forecast John Chambers, Cisco's CEO "Cisco had experienced an increase in caution among U.S. and European customers, with orders dropping off in January after a strong December," according to The Wall Street Journal

The Cisco predictions say a great deal about what is likely to be going on in telecom and cable spending. Its switches and routers run much of the broadband internet. Wall St. had assumed that large US companies in the sectors would accelerate spending to meet customer demand for faster internet service. Instead, they are tapping the breaks. This is an indication that corporations in the sector are willing to use their old "plants" for awhile longer and give consumers a bit less than they want, of, worse, that consumer spending is trailing off.

If the consumer is pinched when it comes to telephone and TV service, then the overall economic downturn has a ways to go.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.