A company the size of Cisco (NASDAQ:CSCO) should not be growing during a recession. But, it did anyway.
Cisco reported net income of $2 billion, or $.33 a share, compared with a profit of $1.9 billion, or $31 a year ago. Revenue moved from $9.4 billion to $10.4 billion.
According to MarketWatch, on its earnings call the company "reaffirmed Cisco's long-term revenue growth projections of 12%-17% per year."
There are two reasons Cisco's numbers are surprising. The first is that its large router business primarily sells products to telecom and cable companies. Capital spending in those sectors has not been sharply increasing, so Cisco must be improving its market share or its margins.
Another significant piece of Cisco's business is home set-top boxes and small-business video conferencing. It touches a vast pool of consumers and enterprise with modest numbers of employees.
In other words, Cicso has risk across many pieces of the economy, and its still did well.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
8-06-2008 @ 2:27PM
itsco said...
Duh! Does the power grid stop being maintained during a recession? Cisco's business is huge--ever increasing demands on the internet utility will keep Cisco in the black even in the worst case scenerio.