Cisco’s earnings fell 21% as first quarter sales shrank 17% in what the company described as period of “market transition”.
The networking leader announced Wednesday net income of $1.3 billion and earnings per share of 23 cents on $8.2 billion in revenue.
Router sales took the biggest hit, falling 32% to $1.4 billion, while switches, its biggest segment, declined 20% to $2.6 billion. Asia-Pacific sales were down 22% and sales to carriers slid by a third.
But the company added another $2 billion to its cash hoard, which now stands at $33.6 billion. In a company presentation, Cisco said it planned to “aggressively invest in new and adjacent markets for the longer term.”
As with other large vendors, the services group saw an increase in demand from customers looking to outsource network management, with sales rising 9%.
Cisco said it would be “very aggressive” in Q2 to position itself for the upturn “while continuing to maintain tight financial management.”
“We will use this period of market transition to align and optimize resources, make strategic investments, move into market adjacencies and enhance relationships with our customers,” said chairman and CEO John Chambers.
Net sales for the first nine months of fiscal 2009 were $27.6 billion, compared with $29.2 billion for the first nine months of fiscal 2008.
Excluding stock-based compensation and other items, Cisco's earnings were 30 cents per share, 5 cents above the average forecast of analysts’ forecast, AP reported.