& 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
The time has come for a telecom app store to save the industry.
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 Documentaries
BCE 2017: Intel's Take on Network Transformation

5|24|17   |     |   (0) comments


In this BCE 2017 keynote, Lynn Comp discusses Intel's vision for areas such as analytics, automation and service assurance. For more videos and BCE coverage, see http://www.lightreading.com/bce.asp.
LRTV Documentaries
Order From Chaos: The Steve Saunders BCE Keynote

5|24|17   |   17:27   |   (0) comments


Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability testing.
Think of this as the video sequel to the recent columns he's written about NFV and the prospect of a telecom app store. (See

LRTV Documentaries
Service Provider Panel: Partnering in the Digital Era

5|22|17   |     |   (0) comments


Coopetition has always been part of telecom, but the ecosphere now includes data centers, vendors, apps developers, cloud service providers and Internet content providers. This BCE 2017 panel explores the new attitudes among network operators as to the value and variety of ...
LRTV Interviews
Site Demo: AT&T's IoT Flow Platform

5|19|17   |   04:25   |   (0) comments


At AT&T's R&D center in Tel Aviv, Israel, project leader Eyal Segev talks about the operator's Flow platform and how it helps to prototype IoT applications.
LRTV Documentaries
Agent of Change: A Q&A With AT&T's John Donovan

5|18|17   |     |   (0) comments


Carol Wilson talks with the man leading AT&T's transformation efforts about the challenge of change.
LRTV Documentaries
BCE Service Provider Panel: The New Business Realities

5|18|17   |     |   (0) comments


For virtualization to happen, the telecom industry first has to grapple with key functional aspects of SDN and NFV that need to be universal, such as onboarding of virtualized network functions and federation of software-defined networks.
LRTV Interviews
BCE Service Provider Keynote: CenturyLink

5|16|17   |   22:32   |   (0) comments


Aamir Hussain leads the Product Development and Technology organization at CenturyLink, which includes the company's information technology function. He is an experienced senior technology executive with more than 25 years of proven success in the implementation of global technology operations, operationalization of complex technology, infrastructures and business ...
LRTV Interviews
CenturyLink CTO on Transformation

5|16|17   |   7:43   |   (0) comments


The 80-year-old telco has already gone through several transformations, including every time it made an acquisition, but its purchase of Level 3 coupled with changes in technology and customer expectations necessitates its biggest transformation yet.
LRTV Documentaries
Light Reading Hall of Fame 2017

5|15|17   |   5:05   |   (1) comment


Find out who made it into Light Reading's Hall of Fame this year.
LRTV Interviews
Site Visit: AT&T's Tel Aviv R&D Center

5|15|17   |   09:58   |   (1) comment


Nir Shalom, general manager and VP of application development at AT&T Israel, talks about the key service developments undertaken at the AT&T R&D facility in Tel Aviv and how the team there has adopted new ways of working.
Telecom Innovators Video Showcase
Act on Your Intelligence With Amdocs aia!

5|15|17   |     |   (0) comments


Amdocs CMO Gary Miles explains how communications service providers can seize the AI opportunity with Amdocs real-time digital intelligence platform.
LRTV Interviews
Logtel CEO: Making Sense of IoT

5|15|17   |   09:48   |   (0) comments


Jacques Bensimon, founder and CEO of Tel Aviv-based training and consultancy Logtel, talks about the need to make IoT more than just a buzzword.
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
AT&T's Donovan: Women Adapt Faster Than Men
Sarah Thomas, Director, Women in Comms, 5/18/2017
Sonus & Genband Finally Combine to Form $745M Company
Dan Jones, Mobile Editor, 5/23/2017
Cities Clamor for More Clout at FCC
Mari Silbey, Senior Editor, Cable/Video, 5/23/2017
What's Blocking 4K TV Today
Alan Breznick, Cable/Video Practice Leader, Light Reading, 5/22/2017
Fright Wigs & Cocktails: BCE 2017 in Pics
Mitch Wagner, Editor, Enterprise Cloud, 5/19/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
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.
Animals with Phones
What Brogrammers Look Like to the Rest of Us Click Here
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.