Selling telecom and IT equipment may be about to get...

they are also waiting to see how the European economy and U.S. government policies take shape before committing to major purchases. Cisco’s customers are “looking to see more certainty on the global economy and in Europe and secondly, more certainty in terms of government policies that can have major impacts on their business,” Chairman John Chambers said. Cisco shares dropped 10 percent Thursday, wiping out $10.5 billion of market capitalization. Chambers said he would bet on customers meeting their promises to spend, but “you need to know that if the situation in Europe begins to get really hard, or the global environment gets softer, or some of these governments -- whether it’s India or Argentina or the U.S. or the five or six major leading countries in Europe -- don’t resolve some of the issues, then people are in this uncertain environment, and when you're uncertain, unfortunately, you don’t spend.” Cisco has a jump on its competitors in gauging the economic landscape because of the way its customers buy its products -- typically in three-month commitments -- and because its products are so widely used, Chambers said. “We can see a hiccup in state and local spending in the U.S. perhaps two or three quarters” before Cisco’s peers, he said. Chambers also briefly discussed the company’s planned $5 billion acquisition of pay-TV software vendor NDS. “Both our service provider customers and key analysts understood the value of this deal immediately when it was announced,” he said. He said he has spoken to more than 20 customers about the transaction and Cisco’s plans to move to cloud-based video delivery through its Videoscape platform. “Every one of them understands the importance of this move and the benefits it gives to them,” he said. Cisco’s sales during fiscal Q3, which ended April 28, gained 7 percent from a year earlier to $11.6 billion. Profit increased 20 percent to $2.2 billion.