Cisco Tops Expectations
The earnings call, though moderately upbeat, was still absent huge optimistic proclamations about the future. CEO John Chambers instead focused on Cisco's competitive positioning.
"We continue to take market share from our top-ten competitors, with [our] revenue growth of 2 percent year-over-year versus [their] drop of 43 percent percent," says Chambers.
As for the future? "I feel better about going into Q4 [compared to Q3], but not great," says Chambers.
Cisco's sales for 3Q02 were $4.8 billion, compared to $4.7 billion during the year-ago quarter. The company's pro forma earnings, which exclude a plethora of special charges, were $838 million, or 11 cents a share, a significant improvement versus the pro forma net income of $230 million, or 3 cents a share, it reported during 3Q01. Cisco's net income was $729 million, or 10 cents a share. This was much improved over its net loss of $2.7 billion, or 37 cents a share, for the year-ago quarter.
Wall Street expected that Cisco would earn 9 cents a share on $4.8 billion in revenues; Cisco met expectations for the revenue number, and it beat the expectations on pro forma earnings by a penny.
During the quarter Cisco booked $1.44 billion in revenues from routers; $1.92 billion from switches; $240 million from access gear; $384 million from optical gear, IP phones, and other assorted products; and $816 million from services. One of the concerns Chambers mentioned on the investor conference call was a "major decrease in optical business during this quarter."
Cisco's gross margins were 63.1 percent, and it turned inventory 7.5 times during the quarter.
Though there hasn't been an announced layoff, Cisco's headcount has dropped by 851 people in just three months. Cisco now employs 35,935 people, compared to the 36,786 it employed in late February -- the last time it denied that it would lay anyone off (see Cisco CFO: More Cuts Needed).
"We have spent the last sixteen months positioning Cisco for an inevitable upturn in the economy," Chambers said in the conference call. He did, however, stop short of declaring that the telecom recession is over.
Cisco CFO Larry Carter says that Cisco's revenues for 4Q02 will be "flat to up slightly, meaning very low single-digit growth."
In after-hours trading on Island, Cisco gained $1.67 (12.77%) to $14.75 on the news.
— Phil Harvey, Senior Editor, Light Reading