Cisco Systems (Nasdaq: CSCO) rose 94 U.S. cents to $14.63 in morning trading Thursday following reports that the company will stop making a slow-selling optical router.
Cisco will reportedly discontinue the product, acquired when the company bought Monterey Networks in 1999, and focus on more profitable markets, such as equipping metropolitan areas with switches and routers. The workers involved in making the product will reportedly be transferred to other projects.
Cisco, along with others in the high-tech equipment industry, has been hit by a widespread economic slowdown. Chief executive officer John Chambers recently said in a Financial Times interview that he expects the U.S. economy to remain in a slump for at least three more quarters.
Cisco’s latest quarterly report showed that the company missed analysts’ revenue and income expectations by a penny, falling short of estimates for the first time in 15 quarters.
Net income for the quarter rose to $1.33 billion, or 18 cents per share, from $897 million, or 12 cents per share, in the year-earlier quarter. Revenue was $6.75 billion, up from $4.36 billion.
Cisco, the largest maker of networking equipment in the U.S., is considered one of the bellwethers for the technology industry. The company has seen its shares fall from the $68 level over the past 52 weeks.
Reports last month that Cisco would lay off some 17 percent of its workforce sent chills throughout the stock market. The cuts, said to cover some 3,000 to 5,000 full-time workers, in addition to some contract and temporary employees, were reportedly the company’s first widespread layoffs in years.