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Cisco Systems (CSCO) revealed the extent of its lousy financials last night, with its third quarter results. After initial confusion, the markets reacted badly. This follows last month's admission of "Unacceptable execution" by CEO John Chambers. In IT Blogwatch, bloggers run the numbers.
Your humble blogwatcher curated these bloggy bits for your entertainment. Not to mention Why reality sucks, compared to video games...
Stephen Lawson reports the results:
[This] was the first since Chairman and CEO John Chambers laid out a plan to streamline Cisco's organization and renew its focus on core businesses. ... Along with grim news about the third quarter ... with revenue up less than 5 percent ... Cisco estimated that revenue in [Q4] would be ... up less than 2 percent.
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Job cuts are beginning with a recently announced early retirement program. ... Cisco is in the midst of a 120-day review of its entire product portfolio to look for cost savings.
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Cisco's profit for the quarter fell to $0.33 per share.
Mark Gongloff initially called it a "solid" quarter:
42 cents a share, vs 38 cents expected ... the widest margin ... since [Q2] of 2010. So, losing streak over. ... This could be something of a relief for the broader market tomorrow.
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Revenue in-line at $10.87 billion. Gross margin 61%, down from about 64%. ... The street will probably like the look of that margin number. ... Stock now up 4% after hours.
But the after-hours market later changed its mind, reports, err, Mark Gongloff:
The stock has fallen more than 2.5% into the red ... after earlier being up 4%. Sounds like [Q4] earnings and sales are going to fall short of estimates. ... EPS will be 37 to 39 cents per share, compared with the streets expected 42.
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The market had expected better. ... There will be blood ... which will include lots of job cuts.
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So much for Cisco breaking its streak of earnings faceplants.
So why did the stock first jump 4%, then sink like a stone, Eric Savitz?
[The company] posted slightly better-than-expected results ... and said it plans to cut expenses by $1 billion. ... To be clear, we do anticipate a workforce reduction. ... Non-GAAP gross margin was 63.9%, which was above the companys guidance. ... $43.4 billion in cash, up from $40.2 billion at the end of [Q2].
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[But] the press release is just the first part of the drama in any Cisco quarter; the rest comes on the conference call. ... It expects FY Q4 revenue to be ... $10.84 billion to $11.02 billion, with non-GAAP profits of 37-39 cents a share. That is below the ... consensus of $11.67 billion and 42 cents.
And Tiernan Ray guns the point home:[You're fired -Ed.]
Shares in late trading were down 53 cents, or 3%, at $17.25, reversing a 4% gain immediately following the report of better-than-expected Q3 results.
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The investor slides that Cisco offered ... show some improvement and some deterioration ... in various product categories. ...
Sales of routers ... rose 7% ... to $1.9 billion, while switch sales ... fell 9% to $3.3 billion ... a dramatic reversal of the 25% gain back in Q1. ...
Sales of newer products rose 15% ... below the 19% recorded in Q2 and the 22% recorded in Q1. ...
Video Connected Home products were down 5%, collaboration technologies were up 39% ... wireless products were up 32% ... data center products were up 31%.
