Cisco cautiously optimistic despite 17% drop in sales

Cisco, the network equipment manufacturer, yesterday revealed a 16.6% fall in revenues during its third quarter of the financial year, from $9.8 billion down to $8.2 billion.

The company’s router business saw the sharpest revenue decline, down 32% to $1.4 billion. Switch revenue fell 20% to $2.6 billion, while the ‘advanced systems’ division, which sells kit include Cisco’s video-conferencing equipment, saw revenue fall 12% to $2.1 billion.

Profitability for the company fell even faster than revenue. Net income dropped by 24% year-on-year to $1.3 billion.

CEO John Chambers was nevertheless mildly upbeat. Speaking on a conference call for investment analysts, he implied that customer spending was expected to improve.

“For the first time in many quarters, many of our global customers are describing the business momentum in a different way,” he said. “They are seeing some stabilisation, a levelling out, as opposed to what has been over the last several quarters a continued deceleration in their business.”

Despite these remarks, Cisco clearly does not expect business to pick up that quickly. The company’s forecast for the coming quarter predicts that revenue will fall by between 17% and 20% to around $8.5 billion.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media (now Bonhill Group plc) from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The...

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