Tuesday, August 9, 2011

Cisco Posts Solid Quarter, Upbeat Outlook

Cisco reported fourth quarter net sales of $11.2 billion, up 3.3% compared to a year ago. Net income (GAAP) was $1.2 billion or $0.22 per share, down 36.3% from last year. The numbers came in ahead of Wall Street expectations.

"We've made significant progress on our comprehensive action plan to position ourselves for our next stage of growth and profitability, while delivering solid financial results in Q4," said John Chambers, chairman and CEO, Cisco. "As we start our next fiscal year, you will see a very focused, agile, lean and aggressive company, that is laser focused on helping our customers use intelligent networks to transform their businesses."

In a conference call, Cisco executives said the company is now re-energized and will benefit from its better aligned portfolio and simplified organizational structure. John Chambers said he is confident about the upcoming quarter and expects the company will be retaking market share in important segments such as carrier routing and data center sales.

Some notes:

  • Switching now accounts for 31% of revenue

  • Services now account for for 20% of revenue

  • Routers now account for 15% of revenue

  • New Products now account for 31% of revenue

  • Service Provider spending in the quarter was very solid.

  • Public sector spending remains under pressure as government at all levels tighten spending.

  • Revenue growth was strongest in US & Canada, followed by Asia Pacific. European markets and Emerging markets were relatively flat.

  • Gross margins came in at 62.7% compared to 64.1% a year ago.

  • The previously announced workforce reduction of 6,500 employees has been implemented, including a reduction of 17% in positions at the VP level and above.

  • Cash and cash equivalents and investments were $44.6 billion at the end of fiscal 2011, compared with $43.4 billion at the end of the third quarter of fiscal 2011, and compared with $39.9 billion at the end of fiscal 2010.

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