Cisco says its customers are being increasingly cautious

The internet equipment maker posted a 7.2% rise in profits to $2bn (�1bn) in the past three months to January, up from $1.9bn in the year earlier.

But the group said sales growth for its next quarter would be less than the market had been expecting.

Analysts say the news will add to concerns that technology firms will suffer in the US economic downturn.

"We are seeing our US and European customers being increasingly cautious," said Cisco chief executive John Chambers.

Boom time over?

Cisco derives a large portion of its revenue from phone companies and other businesses which buy its equipment to run office networks.

It has recently been making a big push into video conferencing to boost its presence in the online business communications market.

But the worry is that as consumer spending in the US tails off and unemployment rises, business spending on their networks will shrink and technology companies will suffer.