The internet equipment firm Cisco Systems has issued a warning about its future earnings, sending its shares sharply lower in after-hours trading in New York.

The issues here are macroeconomic

Shawn Campbell, analyst

The warning dampened sentiment around the world and brought exuberant traders back down to earth after Wednesday's welcome half-a-percentage-point cut in US interest rates.

"The poor share price performance of Cisco in after-hours trade... spread concerns over the near-term performance of the US equity market," said Keiji Numata of Japanese firm Toyo Securities.

Shares in Cisco - seen as a barometer of the health of corporate America - initially rose.

The company reported a recovery from last year's first quarter net loss of $268m (�171m) to net profits of $618m (�394m) for this year's August to October quarter.

But after-hours gains which saw a rise to $13.90 per share were slashed as the stock slipped back to $12.96, following a conference call where Cisco's chief financial officer, Larry Carter, predicted flat or falling sales during the November to January quarter.

Ahead of Cisco's announcement, the stock had closed at $12.96 on the Nasdaq exchange.

Weak spending

Cisco's gloomy prediction for the future is simply because of the tough times being experienced by US companies, Cisco insisted.

Companies' spending on technology is down, and it is likely to stay down until the economy picks up, observers agreed.

"The issues here are macroeconomic," said analyst Shawn Campbell of Northern Trust asset management.

"Until you see a recovery in (information technology) spending, I wouldn't expect the stock to make a sustained move above $15 a share."