Cisco results cheer investors
The once and future 800lb gorilla of the telecommunications equipment sector, Cisco Systems, has done something it hasn’t managed to do in about a year - make investors smile.
Not a big smile, but still, a smile is a smile. Fiscal 4Q revenues of $11.2 billion (€7.8 billion) came in a few hundred million dollars above analyst forecasts, and non-GAAP earnings per share of $0.40 was likewise a positive surprise.
Of course, positive is a relative thing and the bar is pretty low right now. The company is in the midst of a huge round of layoffs, as it tries to retool itself after a gluttonous couple of years in which they tried to leverage a huge cash stockpile by buying everything tech related that wasn’t nailed down.
Earlier this year they finally knuckled under and did what every other company has done when it gets too big to use all its cash flow: offer a dividend. One wonders what took so long.
But nevertheless, we all needed a boost and Cisco’s fiscal 4Q is at least that much. Guidance for the next quarter is for sales growth of 1% - 4%, whereas analysts predicted a decline. Non-GAAP earnings per share are projected to come in at $0.38 - $0.41 – in line with expectations.
Chief John Chambers admits it was time for “a fundamental change,” at the firm, stating he is “very confident about Q1 in terms of what we can control and influence, and we have built some conservatism into it.”
Cisco is refocusing its business on five areas: routing and switching, workplace collaboration, data centers, video, and architecture that integrates with the network. But the process is, and will continue to be, painful, especially to those affected.
Rob Powell is founder & editor of Telecom Ramblings, which was set up in 2008. The website is dedicated to discussing trends and developments in the telecom industry.