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April 7 (Reuters) - J.P. Morgan Securities cut its revenue growth estimates for network equipment giant Cisco Systems Inc (CSCO.O) and downgraded rivals Aruba Networks and ShoreTel, citing slowing technology spending due to a prolonged slowdown in the U.S. economy.
The brokerage expects Cisco’s revenue to grow at 10 percent in fiscal 2009, compared with its previous forecast of 15 percent.
JP Morgan said an extended slowdown in the U.S. economy is leading to lower technology spend as companies find ways to cut costs. Deal sizes are expected to be downsized, it added.
The brokerage has a “neutral” rating on Cisco’s stock, which was down more than a percent at $24.05 in morning trade on Nasdaq.
The brokerage downgraded ShoreTel Inc (SHOR.O), which provides business phone systems carried over the Internet, to “underweight” from “overweight.”
Analyst Ehud Gelblum said he expects the weak North American economic environment to crimp IP telephony spending by businesses through 2008 and into 2009.
“We see a strong potential for further earnings disappointments and few chances for positive catalysts over the coming quarters,” he said.
Downgrading Aruba Networks Inc ARUN.O to “underweight” from “neutral,” Gelblum said extending sales cycles and shrinking order sizes could continue to plague Aruba throughout 2008 -- especially in the retailing vertical.
Aruba, which supplies equipment for secured wireless networks used in offices, is the second largest player in the segment after Cisco.
Aruba Networks shares were down more than 8 percent at $4.81, while those of ShoreTel dropped about 3 percent to $5.22.
The broader S&P 1500 communications equipment industry index .15GSPCOEQ was down 0.31 percent.
The brokerage lowered its fiscal 2009 revenue estimates for Cisco to $43.57 billion from $45.39 billion. It cut its earnings view to $1.68 a share from $1.76, excluding stock-based compensation expense.
Cisco, the world’s biggest maker of routers and switches which direct Internet traffic, warned in its last earnings report of a rapid slowdown in U.S. and European orders, forecasting fiscal third-quarter revenue would rise just 10 percent.
Gelblum said, “...the weakening demand environment in the U.S. is overshadowing the secular growth story that drove demand over the last year, rather than any structural issues at Cisco.” (Reporting by Esha Dey, Saumyadeb Chakrabarty in Bangalore; Editing by Anil D‘Silva, Deepak Kannan)