Cisco turned in a solid report: beats on revenue ($12.4 billion vs. $12.14 billion expected) and earnings (55 cents vs. 53 cents). Revenue guidance was solid, though EPS was a little light. Gross margins held up.
So why the angst?
Beyond the headline numbers Wednesday, there was plenty of signs of turbulence. Cisco's sales in emerging markets were down, and CEO John Chambers said they won't return to growth for several quarters. And there are the layoffs: 6,000 more coming soon, wiping out 8 percent of Cisco's already reduced workforce.
The layoffs weren't exactly shocking. Chambers had signaled earlier in the year that he would protect Cisco's profitability in these uncertain times, which clearly implied he would cut more workers if sales growth didn't materialize. With this report's dismal outlook on emerging markets growth, the cuts were almost a foregone conclusion. The stock dropped more than 2 percent after the open Thursday. (Click here for the latest price.)
A deeper question, though, is what this tells us about Cisco.