& cplSiteName &

Cisco Earnings: What to Watch For

Mitch Wagner
8/13/2014
50%
50%

Cisco reports its fourth-quarter earnings after markets close Wednesday. The company's had problems, with revenues declining three consecutive quarters. We've also heard reports about big personnel changes, both at the top and for the rank and file. Here's what to watch for.

Cisco's revenue decline will continue. Financial analysts expect Cisco Systems Inc. (Nasdaq: CSCO)'s revenue will decline again, projecting revenues of $12.14 billion, down 2.2% from last year's $12.42 billion. But the news for investors isn't all bad -- earnings are projected at $0.53, up from $0.52 last year.

Cisco said in its most recent earnings call, in May, that weak carrier business was pulling down revenue, but the sector is improving and future growth will be driven by the cloud, the Internet of Everything (Cisco's term for the Internet of Things), and other new technologies and markets. John Chambers, Cisco's chairman and CEO, said he was confident the company is turning around. (See Cisco Earnings Suffer From Carrier Weakness.)

Probability of continued revenue decline: High. The turnaround is still a work-in-progress. Cisco may well beat analyst expectations, but it won't beat its year-ago-quarter revenues.

Chambers may step down. The 65-year-old Cisco honcho said two years ago that he might step down in two to four years. That means his window of retirement is open. Sources told Light Reading in June that Cisco would announce retirement in July. That obviously didn't happen. (See Is Cisco's Chambers Retiring in the Fall?)

But 451 Research analyst Christian Renaud told us in June that Chambers will likely announce his retirement on an earnings call, and do it one or two quarters in advance if he can. So maybe our sources were right -- just off by a few weeks?

Probability of Chambers announcing retirement: Moderate. He'll likely do it sometime. But it's more likely he'll do it when Cisco has a couple of quarters of increased revenue. He won't want to go out when the company is turning around; he'll want to do it when the turnaround is done.

Cisco may announce layoffs. At the same time we were hearing about Chamber's upcoming retirement, we also heard about a reorganization that may result in 20,000 people changing jobs inside the company. Now, Cisco blogger Brad Reese reports that up to 20% of Cisco employees might be laid off October 1.


Find out more about key developments related to the systems and technologies deployed in data centers on Light Reading's Data Center Infrastructure channel


Probability of layoffs: Moderate. Cisco has a history of laying people off -- 4,000 people a year ago, plus 900 in October, according to Business Insider. Layoffs obviously help the bottom line in the short term by cutting costs, but layoffs also mean there are fewer hands to take advantage of possible new business. Layoffs without a strategy change are like a medieval doctor bleeding a patient in hopes of making them well again.

Cisco may split the company. This is a crazy idea -- but maybe crazy enough to work: Split Cisco into high-growth and high-yield businesses, suggests RBC Capital Markets' Mark Sue. Both companies would go on a buying spree, with "YieldCo" picking up high-yield companies such as Juniper, Amdocs and Check Point, while "GrowthCo" would buy high-growth small, and nimble technology companies with a focus on new and emerging technologies.

Probability of Cisco splitting up: In the words of the immortal Wayne Campbell: "It might happen. Yeah, and monkeys might fly out of my butt."

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to wagner@lightreading.com.

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
smkinoshita
50%
50%
smkinoshita,
User Rank: Light Sabre
8/13/2014 | 10:42:26 PM
Re: Whisper
@Sam Masud -- I was thinking the same thing.  Business IT needs are evolving rapidly lately.  If Cisco is really willing to adapt I don't think the bad times will last too long (and if they're not... well, more of the same)
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
8/13/2014 | 3:45:30 PM
Re: Whisper
Mitch

Seems like Cisco's big customers are telling Mr. Chambers to really, really think hard about software (SDN?). Check out this hot-off-the-press article:

http://www.bizjournals.com/sanjose/news/2014/08/13/ciscos-john-chambers-told-by-major-customers-get.html
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
8/13/2014 | 12:04:52 PM
Whisper
SeekingAlpha says the Cisco whisper number is $0.53, same as the official earnings estimate. And that Cisco has a 55% record of beating the whisper number. 
More Blogs from Wagner’s Ring
Can you believe people still think open source isn't fit for business?
I love my Martian Notifier. But it was not a love that was meant to last.
The best Twitter jokes about Apple's big spring news.
Light Reading brings you the latest news, information and insights about clouds for the enterprise. Yes, the enterprise.
While everything else declined, cloud services grew revenue briskly in Apple's most recent quarterly earnings.
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, September 14, 1:00PM EDT
What Is Agile?
Kent J. McDonald, Product Owner, Agile Alliance
UPCOMING COURSE SCHEDULE
Friday, September 16, 1:00PM EDT
How to Implement Agile
Alan Bateman, Director, Agile Transformation
Wednesday, September 21, 1:00PM EDT
What Is DevOps?
Colin Kincaid, CTO, Service Provider, Cisco
Friday, September 23, 1:00PM EDT
How to Implement DevOps
,
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Between the CEOs
CEO Chat: UXP Systems' Gemini Waghmare

8|26|16   |     |   (0) comments


Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
LRTV Custom TV
F5 Virtual Network Function Integrations With Partner Orchestration Platform

8|24|16   |   6:38   |   (0) comments


F5's Kishore Patnam, product manager for F5's service provider solutions, discusses why service providers are moving towards virtualization and how his clients are utilizing F5's solutions.
Between the CEOs
CEO Chat: Intel's Alexis Black Bjorlin

8|17|16   |   06:23   |   (0) comments


Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Telecom Innovators Video Showcase
Accelerating Telecom Digital Transformation With Nominum DNS

8|1|16   |   12:04   |   (0) comments


Light Reading's Steve Saunders gets an update from Nominum CEO Gary Messiana on how his company is helping carriers on the digital transformation journey.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (1) comment


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (2) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Google Fiber Can't Be Called a Failure
Carol Wilson, Editor-at-large, 8/26/2016
FirstNet: A Billion-Dollar Boondoggle?
Dan Jones, Mobile Editor, 8/26/2016
WiCipedia: Should Men Be Included? & Olympians Face Discrimination
Eryn Leavens, Special Features & Copy Editor, 8/26/2016
How the Padres Hit an IoT Home Run
Mitch Wagner, West Coast Bureau Chief, Light Reading, 8/25/2016
Google Fiber Downsizing Not Confirmed
Mari Silbey, Senior Editor, Cable/Video, 8/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
Live Digital Audio

Bridging the tech skills gap is a major challenge for service providers and suppliers alike today – and the challenge is two-fold when it comes to increasing the number of women in the comms space. Level 3 Communications has made it a priority to overcome both challenges by implementing several unique programs focused on building the right candidates from within – in addition to filling the funnel by supporting STEM and other education programs. During this radio show, you’ll learn about these programs from Mary Beth McGrath, SVP of Global Talent Management at Level 3, and the best ways to bridge your own skills gap so that you are motivated and equipped for change. Plus you’ll have the chance to ask Mary Beth your questions live on the air.