OK, sure, a prediction that fourth-quarter revenues will be down 17 percent to 20 percent versus the year-ago period isn't a reason to break out the champagne. But Cisco, which reported third-quarter figures today, said it's seeing signs that business might have at least stopped getting worse.
"For the first time in many quarters, many customers are describing their business momentum differently," CEO John Chambers said on today's conference call with analysts. They're saying sales are leveling off, rather than continuing to scream downward.
By contrast, Cisco's earnings call in February was a downer, with the company saying market conditions would almost certainly worsen in that quarter.
That forecast turned out to be on the money today as the company announced third-quarter revenues for the quarter ended April 25. (See Cisco Posts Q3 .)
Table 1: Cisco Earnings Snapshot
|Net Income ($B)||1.773||1.348||-24%|
|Share Price ($)||26.33||19.61||-26%|
|Source: Cisco, Yahoo Finance|
Revenues were down, as expected, but Cisco beat analysts' expectations on the profit side.
Table 2: Cisco vs. Analysts
|EPS, non-GAAP ($)||0.25||0.30|
|Source: Thomson, Reuters, Cisco|
Chambers did say Cisco expects revenues for the fourth quarter, which ends in July, will be 17 to 20 percent less than they were a year ago. The forecast translates to revenues of $8.29 billion to $8.6 billion, beating the analyst consensus forecast of $8.26 billion.
But he noted that, Cisco's order "growth" rate (shrinkage rate, really) during the third quarter was consistent from month to month. In past quarters -- especially the one that ended January '09 -- year-over-year "growth" got worse from month to month. Chambers interpreted this as a sign that business might be ready to stabilize.
Other companies, including Juniper Networks Inc. (NYSE: JNPR), likewise say they're seeing signs of stabilization. (See Juniper Sees Q1 Stabilize.)
Even so, Chambers noted that customers are still disappointed with their businesses' growth rates. He also pointed out the obvious caution: that a stabilized market doesn't guarantee that an upturn is imminent, and that there's even room for things to get worse again.
Cisco shares were up about 23 cents (1.2%) at $19.84 in after-hours trading at press time.
— Craig Matsumoto, West Coast Editor, Light Reading