US banking crisis hits IT industry

US banking crisis hits IT industry

Cisco could be just the first major IT firm suffering the consequences of Wall Street turmoil

Shares in Cisco Systems fell more than nine per cent in after-hours trading on Wednesday, fuelling concern that the financial crisis in US banks could limit IT spending.

The sub-prime mortgage has hit major US banks, which are among the world's biggest purchasers of IT.

As a result, US business growth is expected to remain unpredictable, said Cisco chief executive John Chambers, in a conference call to discuss the group's first quarter results.

Cisco shares lost 9.1 per cent to $29.77 (£14) after Wednesday's close, having risen more than 20 per cent this year.

Wednesday's earnings announcement unveiled a 37.1 per cent year-on-year rise in net income to $2.2bn (£1bn) and was followed by a three per cent share price slip.