SAN FRANCISCO -- Cisco Systems, a bellwether for communications equipment demand, yesterday reported revenues of $6.06 billion for the January quarter, disappointing Wall Street and signaling a potential slowdown for its suppliers.

In a research note, Deutsche Bank said Cisco's performance and outlook are behind its "cautious view" of the EMS sector. The maker of networking gear is one of the largest customers of the EMS industry.

Cisco's sales were up 1.5% sequentially, but below Street expectations of $6.13 billion. Year-on-year revenue forecasts are decelerating, from 12% in January
to 8 to 10% for the current quarter.

The combination of slowing end demand, contracting component lead times and relatively high inventory levels across the communications infrastructure market continues

Cisco said its internal book-to-bill ratio for communications infrastructure gear is below 1.0, the benchmark for growth. "We continue to believe the recent softness across the supply chain reflects slowing end-demand and customers' inventory reduction efforts," DB wrote.

"Look for Cisco to work inventory levels lower in future quarters in response
to softer end market demand and improved component availability. This will likely translate into soft near-term demand for EMS suppliers," DB wrote.

The EMS makers which stand to be most affected include Celestica (more than 10% of revenue comes from Cisco), Solectron (14%) and Jabil (15%).