A Cisco Systems Inc executive said on Tuesday the growing popularity of social networking, user-generated content and other new Web services will help U.S. corporate orders increase by double-digit percentages.
Cisco Senior Vice President Robert Lloyd, who oversees U.S. and Canadian operations, said a new generation of Web users would help drive demand for the company's network equipment and other products.
If we're right and collaboration is the biggest opportunity to increase productivity and grow businesses, I think we have one of the biggest opportunities to increase our installed base and create a very significant upgrade cycle, he told Reuters in an interview.
Orders in the U.S. enterprise segment, representing major U.S. corporate accounts, slowed to single-digit growth in the second and third quarters of fiscal 2007, before recovering to 12 percent in the fourth quarter. Cisco's fiscal year ends in July.
We think that return to growth in the teens is sustainable, Lloyd said, adding that it was a long-term outlook.
Analysts have said that while Cisco was enjoying strong sales to emerging markets and telecommunications service providers, the outlook for U.S. corporate spending was not as clear. The recent turmoil in financial markets and worries over tighter credit conditions have added to such concerns.
Lloyd said the moderation in U.S. enterprise spending was due in part to global corporations investing more overseas.
It doesn't mean that our customers are spending less with Cisco. Where that money appears on our score sheet might have moved slightly to the global market and that's OK, he said.
Although such a shift in spending is likely to continue, Lloyd said U.S. enterprise orders could keep growing due to demand for more advanced networks.
The San Jose, California-based company has benefited from growing demand for advanced routers and switches to handle increasing Internet traffic, both within corporations and among businesses and consumers.
Cisco has also identified unified communications systems, which tie together e-mail, phones and other tools over Internet networks, as a key growth area.
Lloyd said he was comfortable on core router sales in the United States, despite smaller rival Juniper Networks Inc.'s plan to sell a new core router to compete with Cisco's high-end CRS-1 router.
We feel very comfortable with our market position and very confident with the roadmap we have for this year, he said.