Cisco Beats Estimates, John Chambers Hails ‘The Next Cisco’!

by Gaurav Kheterpal on August 12, 2011

Last month, it was reported that Cisco would be looking to cut some 10,000 jobs, saving the company approximately $1 billion. Many analysts said the writing is on the wall and Cisco would struggle to restore lost credibility. Caution was the word as Cisco prepared to release its latest quarterly results.

While the numbers didn’t turn out to be spectacular, Cisco on Wednesday reported quarterly results that beat analyst’s projections after the company cut jobs and drop businesses.

The company’s net income was $1.2 billion in the fourth quarter ending July 30, a decline of 36.3 percent from the same period in 2010. Profit, excluding some costs, was 40 cents a share, while analysts had predicted 38 cents on average.

Chambers hails it as ‘The Next Cisco’. Is Cisco on the road to recovery? Perhaps, it’s too early to tell. None the less, there’s no doubt that at Cisco, results show progress and the world’s leading networking giant offers comfort to the market.

Cisco’s Q4 profit fell 36.3 percent to $1.2 billion, compared to $1.9 billion in the same quarter a year ago. Cisco for its full-year fiscal 2011 reported net sales of $43.2 billion and profit of $6.5 billion in a GAAP basis. The company says restructuring has reduced deal approval time by more than 65 percent, and has also translated into higher conversion rates and higher win rates. Cisco confirmed that restructuring will reduce its population of vice president-level and higher employees by about 17 percent, thereby helping achieve the transformation to be a ‘very focused, agile, lean and aggressive company.’

Several analysts believe Cisco’s earnings are indicative of the direction of IT spending. Though Cisco’s outlook hasn’t been rosy, considering the company just laid off thousands, it has made ‘significant progress on a comprehensive action plan to position itself for the next stage of growth and profitability.’

To be honest, I didn’t really expect Cisco to beat market estimates. Perhaps, it’s got to do with my disappointment with the company in the last year. Once upon a time, Cisco was my favorite networking company – innovative products, able leadership of John Chambers and oozing investor confidence. For several years, Cisco had a dream run as the undisputed leader of the networking empire while others including Juniper and others contested keenly for the silver medal. And then, it lost ‘focus‘, leading to disappointed investors and confused employees.

CEO John Chambers believes the old Cisco doesn’t work for the new world. He’s hailed the vision of ‘The Next Cisco’ which would be more efficient, lower cost, and more customer-focused. He says the company is ‘ready to accelerate’ and do it in a ‘more simplified way’ than it’s done in the past. Whether he can pull it off and revive Cisco’s golden era remains to be seen.

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Written by: Gaurav Kheterpal. Follow TheTelecomBlog.comby: RSS,TwitterFacebook, or YouTube.

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imran August 12, 2011 at 3:57 am

Is it possible for deployed Optical Transmission system to download 240 DVD movies in 1 second?

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