Cisco expects sales drop of more than 15%

Posted Aug 6th 2009 8:00AM by Tom Johansmeyer
Filed under: Earnings Reports, Cisco Systems (CSCO)

Networking equipment manufacturer Cisco Systems (NASDAQ: CSCO) announced Wednesday that sales are likely to fall this quarter, making it four declines in a row. The company anticipates that revenue will fall 15 to 17% for the first fiscal quarter, which ends in October. This will put revenue between $8.6 billion and $8.8 billion -- down from $10.4 billion for the same quarter last year.

For now, Cisco is looking back on a tough fiscal fourth quarter. The company watched net income fall 46% year-over-year from $2.01 billion to $1.08 billion for the quarter. Revenue was off 18%, down to $8.54 billion but ahead of analyst expectations of $8.51 billion.

Impressively, Cisco turned to itself to cut costs. Among the 2,000 jobs cut and $1.5 billion in chopping, the company is using its own video-conferencing software as a way to lower its travel expenses. The effort has given Cisco a bit of breathing room, as cash and cash equivalents rose from $26.2 billion to $35 billion year-over-year, a hell of an accomplishment given what's transpired in financial markets over the past 12 months.

Some analysts look to Cisco as a broader economic indicator, because of its dominant position in its market. Cisco's cuts run parallel to the 1% contraction in the economy this quarter and the nationwide loss of 6.5 million jobs since December 2007.

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