San Francisco  - Fourth-quarter profits at Cisco dropped 46 per cent as customers held back on networking gear, the company said Wednesday.

The world's biggest maker of internet-connectivity equipment reported earnings of 1.1 billion dollars, or 19 cents a share, down from 2.01 billion dollars, or 33 cents a share, a year earlier. Revenue fell to 8.54 billion dollars, a drop of 18 per cent, as product sales slid 22 per cent and service sales grew 4.8 per cent.

Cisco chief executive John Chambers predicted that first-quarter sales would fall between 15 and 17 per cent off from a year ago, but he was upbeat about longer-term profits due to a growth in sequential sales trends.

"If we continue to see these positive order trends for the next one to two quarters, we believe there is a good chance we will look back and see that the tipping point occurred in our business" in the fourth quarter, he said on a conference call to announce the earnings. (dpa)