Cisco Q1 earnings dip

by Ishita Sood - November 5, 2009 - 0 comments

<strong>San Jose, CA, November 5 --</strong> Cisco Systems Inc., the biggest maker of networking equipment, reported its first quarter earnings to be $1.8 billion Wednesday, compared to $2.2 billion for the same period a year earlier.

Cisco's first quarter profit dips by 19 percent as a result of low sales

San Jose, CA, November 5 -- Cisco Systems Inc., the biggest maker of networking equipment, reported its first quarter earnings to be $1.8 billion Wednesday, compared to $2.2 billion for the same period a year earlier.

Cisco started a cost cutting plan during the recession where it froze hiring, cut travel, and merged offices. The California-based company's shares went up by 43 percent this year, closing at $23.29 on the Nasdaq Stock exchange on Wednesday.

Revenue was reported at $9 billion, $1.3 billion less than last year. According to a consensus survey by FactSet Research, analysts had expected earnings of 31 cents a share.

”Economic recovery under way”
On being talked about its first quarter earnings CEO John Chambers said, “Economic recovery is well under way.” As a result, Cisco is basing its forecasts on “an optimistic expectation”.

Chambers told investors that the fourth quarter this year is said to be the "tipping point" of the recession, and that currently "solid indication of economic recovery in locations across the world" is apparent.

"We view the improving economic outlook, combined with solid execution on our growth strategy, as creating unparalleled opportunity to drive more value into the core of the network," he added.

The company reported total cash, cash equivalents, and investments of a whopping $35.4 billion.

Four acquisitions announced
The Silicon Valley company, which sells routers and switches, said most of its the sales are from giant corporate houses and their networks.

Cisco announced they were adding up to $10 billion more to their share buyback program, which now totals around $13.1 billion.

"Given our belief that the market is starting to accelerate, don't be surprised when we start to accumulate expenses," said Chambers.

Cisco has stated that four acquisitions and a joint venture are under way as the company needs to get more aggressive in mergers and partnerships. The company is making more deals now because it expects the economy to recover.

"Building off what we saw as a clear tipping point in Q4, our Q1 results continued to reflect strong sequential growth trends that meet or exceed expectations during normal economic times," Chambers said in a statement.

The Goldman Sachs Group Inc. forecasted recently that worldwide spending on technology products will decline 8 percent this year.

Last edited by Harpreet Bhagrath on Thu, 11/05/2009 - 07:48 | Write to author: Ishita Sood |