August 12, 2010

The spotlight has been on Cisco today, as it reported an increase of 79% of net income - but its CEO offered a take on the economy, and its potential impact on tech investment, which investors and observers have taken gloomily.Specifically, Cisco CEO John Chambers used the phrase "unusual uncertainty" in describing the economic environment.

But according to a Seeking Alpha transcript of the company's earnings call, it seems he didn't mean to instigate a stock sell-off in the tech sector:

So that would be how I'd [answer] your question and not that we are making a call on the economy, the majority of my customers believe the economy, is just going to continue slowly growing up, but very slow and not what they would have said even in three months or four months ago in terms of their expectations and if I'd have told them, I'd say probably the average comes in about at 2% growth for second half of the year. It doesn't mean those customers are right, but it does mean that's what's on their mind in terms of their spending pattern. Did I answer your questions?

We're not making a call on the economy going down, I think that probability is on double-dip or whatever you want to call it are relatively low. We're not making a call in Cisco, other than we think we're very bullish on Cisco and very comfortable with where we are positioned.

The big question driven by all this is, will companies - including insurers - cut their technology investments in light of troubling economic indicators? Cisco seems to think so in lowering its sales forecasts. I'm inclined to think not, at least in this industry, as nothing in the two months I've been at I&T has led me to believe that insurers would look at a slowdown and invest less in tools to increase efficiency and cut costs over the long term. In the health sector, insurers are even investing to help providers adopt new technologies (see our story about Humana).

I welcome your thoughts in comment or e-mail:

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, ...