& cplSiteName &

Cisco Disappoints With Q1

Light Reading
News Analysis
Light Reading
11/9/2004
50%
50%

Cisco Systems Inc. (Nasdaq: CSCO) shares sagged in early after-hours trading after the company's first-quarter earnings didn't match investor expectations.

For its first quarter, which ended October 30, Cisco reported net income of $1.4 billion, or 21 cents per share, on revenues of $6 billion, compared with net income of $1.4 billion, 20 cents per share, on revenues of $5.9 billion for the previous quarter.

For its first quarter last year, Cisco reported net income of $1.1 billion, 15 cents per share, on revenues of $5.1 billion.

Taking away the roundoff factor, Cisco's revenues were $5.97 billion, barely missing analysts' expectations of $6.02 billion. More important, net income of 21 cents per share matched analysts' average estimates as reported by Reuters Research -- but investors have grown accustomed to Cisco beating estimates by a penny.

Not surprisingly, Cisco stock took an immediate turn south in after-hours trading. Early trades were down as much as 51 cents (3%) from today's closing price of $19.75. It probably doesn't help that Cisco's stock had run up recently, increasing 9 percent since October 25.

Cisco had warned that the first quarter ending October 27 would be weak, with revenues growing by 2 percent at most (see Cisco's Q4 Not All Smiles).

Chambers added that second-quarter revenues would be up just 1 to 3 percent, or $6.03 billion to $6.15 billion. Prior to today's earnings announcement, analysts were anticipating $6.21 billion in revenues for the January quarter, according to Reuters.

The guidance percentages didn't surprise everyone, however. Analyst Mark Sue of RBC Capital Markets had predicted Cisco's "1-to-3 percent" guidance range this morning, in a note previewing Cisco's call.

Cisco did drop some glum notes during the call. The book-to-bill ratio for Cisco's first quarter was less than 1.0, an indication that orders slowed down. Chambers also noted "a lot of lumpiness in our router business," citing possible reasons including increased Asian competition and the introduction of new products including the CRS-1 core router (see Cisco Unveils the HFR).

Cisco's board also approved a $10 billion addition to the company's stock buyback program, which has been ongoing since 2001. The buyback program now measures $25 billion total, about $15 million of which remains unspent.

— Craig Matsumoto, Senior Editor, Light Reading




For more info on the state of industry financials, check out the coming Light Reading Live! event:

(34)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 4   >   >>
gumbydammit
50%
50%
gumbydammit,
User Rank: Light Beer
12/5/2012 | 1:06:15 AM
re: Cisco Disappoints With Q1
....why this report is so disappointing?

We're expecting 20% Y/Y growth *and* we're disappointed when they only accomplish that?

Now thats a disappointment I wish we would see more of.
/gd.
change_is_good
50%
50%
change_is_good,
User Rank: Light Beer
12/5/2012 | 1:06:11 AM
re: Cisco Disappoints With Q1
>> The 4 year average show 0% Growth.

what $20b networking company has shown significant growth over the last 4 years?

yea, they have been beat down, but i think there is some upside. they are not a half a trillion dollar company like the past but they are still a player.

what networking company is not overvalued?

slayer666
50%
50%
slayer666,
User Rank: Light Beer
12/5/2012 | 1:06:11 AM
re: Cisco Disappoints With Q1
The fact is Cisco revenues are flat...2001 they were $22B slipping to $19B in 2002,2003, and are now at $22B again...The 4 year average show 0% Growth. Their income has grown but you can only chop expenses for so long before impact new product delivery...They have about $25B cash if you look at Assests-Liabilities...but if they don't show some top line growth, you have to say they are not worth $133B market cap!

2x to 3x revenue if you are lucky!
slayer666
50%
50%
slayer666,
User Rank: Light Beer
12/5/2012 | 1:06:10 AM
re: Cisco Disappoints With Q1
Understood...but, if the days of 50-100% growth are not coming back, then the market cap gets Tad-Tad...(that's Chop-chop with a machete)accordingly.

Just my 2 billion cents...
dwdm
50%
50%
dwdm,
User Rank: Light Beer
12/5/2012 | 1:06:09 AM
re: Cisco Disappoints With Q1
I agree that they are doing really well. They have a ton of cash, their sales look very healthy, no debt etc.. however the market needs to see Cisco back in the 20-30% growth quarter over quarter vs year over year. I think the key for Cisco is going to be markets that are outside the US going forward. Having about half of your business just from the US, means you can grow a lot more outside. That is just my opinion..
technoboy
50%
50%
technoboy,
User Rank: Light Beer
12/5/2012 | 1:06:07 AM
re: Cisco Disappoints With Q1
Cisco is not now nor were they ever worth what their market cap states. They are not growing in the key strategic markets enough to offset the increased competition in their core business. They will not take on a large merger while Chambers is in charge so they will continue to be what they have always been. A decent networking company that does not innovate but markets better than most companies. Like the other previous post stated 0% growth since 01. Sounds like a major change is required.
freetoair
50%
50%
freetoair,
User Rank: Light Beer
12/5/2012 | 1:06:05 AM
re: Cisco Disappoints With Q1
Techno makes a good observation:

"They are not growing in the key strategic markets enough to offset the increased competition in their core business."

I would suggest that is due to thier total lack of technology innovation and engineering leadership.

i.e. No New Products or Markets.

Relying on the core business is great - but sooner or later it just becomes a commodity. As other posters noted this is happening.

santalk2000
50%
50%
santalk2000,
User Rank: Light Beer
12/5/2012 | 1:06:04 AM
re: Cisco Disappoints With Q1
I don't agree with you.
I think this is one of the cheap (considering profitability).

Revenue ForPE MarketCap
Microsoft Corp 37.81B 21.42 323.45B
Intel Corp 33.35B 20.79 145.93B
Cisco Systems 22.04B 19.55 131.35B
Dell Inc 45.38B 24.46 93.45B

Coca-Cola Co (Coke) 21.88B 19.83 99.78B
Gillette Co 9.99B 23.12 43.16B
American Express 28.44B 17.74 68.57B
can go on...
DoTheMath
50%
50%
DoTheMath,
User Rank: Light Beer
12/5/2012 | 1:06:04 AM
re: Cisco Disappoints With Q1
If they are talking about Asian competition, things must be getting a bit dicey on the pricing front. Cisco gear is solid, but way overpriced. Gross margin of 67% is hard to justify even in a high innovation business, and Cisco is not exactly a high innovation business. They have relied on outstanding execution, and major strategic mistakes by the competition.

We can count on Cisco executing well, but the environment will become increasingly price-competitive. Margin pressure will become severe. Think of what happened to EMC to understand what potentially can happen to Cisco. EMC has essentially reinvented itself as a software company going after the likes of Veritas. But they went through serious pain and many company-altering acquisitions to get there.

Given all these, I believe Cisco's stock is still overvalued.
fabius
50%
50%
fabius,
User Rank: Light Beer
12/5/2012 | 1:06:00 AM
re: Cisco Disappoints With Q1
Cisco is definitly lacking the innovating spirit and they are not able to recognize the need of it.
They think you can just buy the innovation by acquiring companies but what they do not understand is that innovation is a state of mind that you must cultivate in order to obtain results.
Cisco is acquiring innovative companies imposing the Cisco way and destroying all the innovation push.
Until IOS is generating revenues they have their point ......
Page 1 / 4   >   >>
From The Founder
Light Reading sits down at CES with the head of Cisco's service provider video business, Conrad Clemson, to discuss how NFV and cloud security relate to video, the challenge of managing 4K/8K traffic, the global expansion of Netflix and virtual reality.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Documentaries
All Change in Video

2|11|16   |   33:12   |   (1) comment


At this moderated panel at 2020 Vision in Dublin, Alan Breznick, Cable/Video Practice Leader of Light Reading, sits down with Jeff Finkelstein, director of network architecture at Cox Communications, to discuss the rapidly changing video market.
LRTV Custom TV
Hosting in Ireland, Past & Present

2|10|16   |   16:07   |   (0) comments


Garry Connolly, president of Host in Ireland, presents the keynote at Light Reading's 2020 Vision Executive Summit in Dublin.
Women in Comms Introduction Videos
What's Hot in Mobile Commerce?

2|10|16   |   12:18   |   (1) comment


Claire Maslen, financial services relationship manager at the GSMA, talks about the development of the digital commerce sector and the types of relationships that mobile operators are developing to further their m-commerce strategies.
LRTV Documentaries
EANTC Tests Nokia IP Routing & Mobile Gateway VNFs for Real World Deployment

2|9|16   |   5:08   |   (1) comment


Nokia obtained validation of its virtualized router and virtualized mobile gateway capabilities through rigorous testing performed by EANTC. The results set a new industry benchmark for outstanding performance, scalability, resiliency and manageability. Nokia VNFs are ready for telco cloud deployment, so that service providers can accelerate mobile, business and ...
Between the CEOs
CEO Chat With Level 3's Jack Waters

2|8|16   |   26:15   |   (1) comment


Light Reading CEO and founder Steve Saunders sits down with Level 3 Communications' CTO Jack Waters to discuss hot topics like virtualization, 4K and the future of telecom...
LRTV Custom TV
The Composable Telco

2|8|16   |   24:46   |   (0) comments


Heavy Reading's Principal Analyst Caroline Chappell presents the keynote at Light Reading's 2020 Vision Executive Summit in Dublin.
LRTV Custom TV
Join Us at the Digital Operations Transformation Summit

2|4|16   |   03:52   |   (0) comments


The Digital Operations Transformation Summit on February 21, 2016 at the Crowne Plaza Barcelona Fira Centre will bring together 50 senior executives to engage in a unique debate on the opportunities and challenges presented by the transformative evolving digital landscape. RSVP now at events@lightreading.com.
LRTV Custom TV
Making the Test: ADVA Ensemble Connector vs. Open vSwitch

2|4|16   |   01:28   |   (0) comments


Light Reading, in partnership with EANTC, recently tested ADVA's Ensemble Connector, which replaces open vSwitch and offers carrier-grade capability and interoperability. The test results strengthen ADVA's credibility as a provider in the virtualization space.
LRTV Custom TV
Bridging the Gap Between PoCs & Deployment in NFV

2|4|16   |   31:50   |   (0) comments


Charlie Ashton of Wind River presents the keynote at Light Reading's 2020 Vision executive summit in Dublin.
Between the CEOs
CEO Chat With Mike Aquino

2|3|16   |   17:34   |   (0) comments


The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Shades of Ray
MWC: Buckle Up for 5G & the IIoT

2|2|16   |   02:28   |   (0) comments


This year's Mobile World Congress looks set to be a 5G land grab and a chance to get down and dirty with the Industrial Internet of Things (IIoT) – but what will the 5G discussions actually be about?
LRTV Custom TV
Case Study: Building China's Next-Gen TV Networks

2|2|16   |   5:01   |   (0) comments


With over 2 billion viewers worldwide, Shenzhen Media Group is one of China's largest content producers. By partnering with Huawei and Sobey, SZMG was able to modernize media operations with the Converged News Center, a production studio that is a model for next-generation workflows.
Upcoming Live Events
March 10, 2016, The Cable Center, Denver, CO
April 5, 2016, The Ritz Carlton, Charlotte, NC
May 23, 2016, Austin, TX
May 24-25, 2016, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
AT&T Lights Fire Under 5G, Plans 2016 Trials
Iain Morris, News Editor, 2/12/2016
Yahoo & Verizon Sitting in a Tree...
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 2/8/2016
Vodafone: Flexible Work Policies Boost Profits
Sarah Thomas, Editorial Operations Director, 2/8/2016
It's Time to Integrate OTT Video
Alan Breznick, Cable/Video Practice Leader, 2/8/2016
Andreessen Facepalms on Facebook Free Basics
Mitch Wagner, West Coast Bureau Chief, Light Reading, 2/10/2016
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO and founder Steve Saunders sits down with Level 3 Communications' CTO Jack Waters to discuss hot topics like virtualization, 4K and the future of telecom...
The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Live Digital Audio

Broadband speeds are ramping up across Europe as the continent, at its own pace, follows North America towards a gigabit society. But there are many steps to take on the road to gigabit broadband availability and a number of technology options that can meet the various requirements of Europe’s high-speed fixed broadband network operators. During this radio show we will look at some of the catalysts for broadband network investments and examine the menu of technology options on offer, including vectoring and G.fast for copper plant evolution and the various deployment possibilities for FTTH/B.