Cisco posts revenues up marginally
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Networking hardware giant Cisco Systems, once the world's biggest company by market valuation, yesterday went some way to repairing its battered reputation with better than expected results.
8 May 2002 Networking hardware giant Cisco Systems, once the world's biggest company by market valuation, yesterday went some way to repairing its battered reputation with better than expected results.
Cisco posted net income of $729 million (€799m) in the three months to 27 April 2002, compared with a net loss of $2.7 billion (€3bn) a year ago. Sales grew 2.1% to $4.8 billion (€5.3bn), thanks largely to growth from computer services.
The company generated $1.6 billion (€1.8bn) in cash during the quarter, taking total cash and equivalents to $21.1 billion (€23.1bn). The cash will be used for possible acquisitions and share buybacks, the company said.
It raised profits primarily through cuts in research and development, sales and marketing and general and administrative costs. The cost of product sales fell dramatically from $4.1 billion (€4.5bn) to $1.5 billion (€1.6bn).
The workforce was also cut back by 2% to just under 36,000 and is expected to decline by 1% to 2% in the current quarter. The cuts helped Cisco raise gross margins by 6% to 63% compared to the previous quarter.
Cisco CEO John Chambers stopped short of declaring that the worst was over, but said the results provided some evidence of a technology rebound. "We are not predicting a turnaround," he said. "Visibility remains difficult and it is too early to call the turn, but we are beginning to see some indications [of an improvement]."
He said that IT spending grew in the retail, education, health care and retail-banking sectors and is bottoming out in manufacturing. The company generally has been able to perform better than many of its rivals, said Chambers, because less than a quarter of sales are to hard-pressed telecoms operators.
