Citing improved company productivity in a challenging environment for information technology, Cisco Systems reported quarterly sales of $4.7 billion, compared with $4.8 billion for the same period last year, a decrease of 2.1%, and compared with $4.8 billion for the preceding quarter. Net income on a GAAP basis was $991 million or $0.14 per share. Some highlights from the quarter:
- Profit and net income for the company are near all-time highs.
- Gross margins for the quarter were 70.4%
- Cash and cash equivalents and total investments were $21.2 billion at the end of the quarter
- Revenue breakdown by product category: Routers 26%, Switches 41%, Access 5%, Other 11% (optical, security, VoIP) , Services 17%
- Revenues by Geography: US 45%, Europe/Middle East/Africa 31%, Americas International 5%, Japan 7%, Asia/Pacific 12%
- Cisco’s service provider business flattened out or improved in the quarter, despite CAPEX cuts by major carriers.
- Cisco is planning to launch a $150 million marketing campaign as a means to break away from its competitors.
- During the quarter, Cisco repurchased approximately $1.5 billion of common stock at an average price of $14.05 per share. The company will remain active in repurchasing its stock
- Headcount at the end of the quarter was 34,987, compared with 36,786 at the same time a year ago.
- Areas of concern include the overall conservative spending attitude of customers; service provider CAPEX budget cuts; weakness in order growth in the US in January; and the conservative planning of its competitors.
- Regarding the prospect of dividends, Cisco said it would consider issuing dividends depending on shareholder interest.
- President & CEO John Chambers said he is more optimistic than he was going into the previous quarter, although from an external perspective he said he was more cautious due to the geo-political climate.
- Revenue guidance for the next quarter is flat to down slightly (2 to 3%). Gross margins are expected to be 68 to 70%.
An archived webcast of the company’s quarterly conference call is online.
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