& 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. 
Educational Resources
sponsor supplied content
Educational Resources Archive
More Blogs from Wagner’s Ring
The Aftershokz Bluez 2S lets you listen to spoken word audio or music while still hearing outside sounds, making it less likely you'll get smooshed by a car while walking a badly behaved dog.
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.
The company reorganization disclosed this week – including the departure of longtime service provider chief Kelly Ahuja – signals a fundamental realignment of Cisco and the industry around cloud computing.
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
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.
LRTV Custom TV
CommScope – Meeting the Demands of Tomorrow's Networks

3|24|17   |     |   (0) comments


Phil Sorksy, Vice President International at CommScope, discusses addressing the challenges faced by service providers today, and as future trends emerge.
LRTV Huawei Video Resource Center
AMS-IX & Huawei's OSN 902

3|24|17   |     |   (0) comments


Huawei shows how its OSN 902 platform helps the Amsterdam Internet exchange to connect the world using multiplexing.
LRTV Huawei Video Resource Center
Huawei's Smart Energy Innovation Center

3|24|17   |     |   (0) comments


In Nuremberg, Huawei showcases its latest capabilities in the digitalization of Internet resources, network infrastructure and intelligence at its Smart Energy Innovation Center.
Valley Wonk
OFC & Hyperscale: A Good Mix?

3|24|17   |   01:50   |   (0) comments


Cloud and telecom players want different types of equipment for their networks, as the chatter at OFC reveals.
LRTV Custom TV
Etisalat on NFV Journey

3|24|17   |   10:37   |   (0) comments


Etisalat is a service provider that prides itself on bringing innovative technologies to the markets it serves. It was one of the first operators to implement 3G and leads the pack in fiber penetration. Now, Esmaeel Al Hammadi, Etisalat's SVP of Network Development, explains the operator's journey to virtualization, beginning with the network core, as well as the ...
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 3

3|22|17   |     |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting on the application of technologies and key business verticals such as transportation, smart city, manufacturing, media and finance.
LRTV Documentaries
No Regrets: Cox's Finkelstein on Fiber & More

3|22|17   |     |   (0) comments


At the Cable Next-Gen Technologies & Strategies event in Denver, Cox's Jeff Finkelstein examines the cable capex conundrum.
LRTV Documentaries
Cable Next-Gen: The 'Mile High' View From Denver

3|22|17   |   11:56   |   (0) comments


Alan Breznick kicks off the Cable Next-Gen Technologies & Strategies event in Denver, casting his thousand-yard stare over cable's current competitive landscape.
LRTV Huawei Video Resource Center
Huawei at CeBIT 2017: Day 2

3|21|17   |   2:27   |   (0) comments


Light Reading reports from CeBIT 2017 in Germany, where Huawei is exhibiting digital transformation solutions around IoT, smart data centers, OpenCloud ecosystem and its newly announced storage-as-a-service solution.
LRTV Custom TV
Driving Better Mobile Customer Experience While Transforming the Mobile Network

3|21|17   |   7:47   |   (0) comments


The Citrix NetScaler mobile gateway is an intelligent traffic management solution which can markedly improve the customer experience provided by mobile operators, even when traffic is encrypted. Critical network services can be consolidated and virtualized using NetScaler. Because of the unique architecture, NetScaler can be deployed on any hypervisor, on a ...
LRTV Custom TV
Mastercard: What's Next for Mobile Payments?

3|21|17   |   7:49   |   (0) comments


2017 marks the fifth consecutive year for Mastercard at Mobile World Congress and it was a great time to reflect on the amazing advances the payments industry has made as well as discuss "What's Next' in the digital commerce future. We spoke to James Anderson, executive vice president of digital payments at MasterCard, about digital wallets to tokenization to ...
LRTV Custom TV
Mastercard: 2 Billion Adults 'Trapped' in Cash Economy

3|21|17   |   03:51   |   (1) comment


Despite advances made in the last several years, two billion adults around the world are trapped in a cash economy and lack what we take for granted -- a safe way to receive, save and use money. Shamina Singh, executive vice president of sustainability and president of the Mastercard Center for Inclusive Growth, chats about how Mastercard is developing new ways to ...
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
High-Band 5G: Let's Address the Range Question, Shall We?
Dan Jones, Mobile Editor, 3/21/2017
Eurobites: A1, Nokia Turn It Up to 11
Paul Rainford, Assistant Editor, Europe, 3/22/2017
FTTH No Slam Dunk for Cable
Carol Wilson, Editor-at-large, 3/23/2017
Welcome to the Wild West of Privacy
Carol Wilson, Editor-at-large, 3/24/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
At MWC 2017, Qualcomm's CTO Matt Grob talks to Light Reading's CEO and Founder Steve Saunders about the progress being made in the development of the technologies and standards that will underpin 5G.
Animals with Phones
Neither Do We Click Here
Is that a prerequisite?
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.