More Videos
- HP Comes in As Expected; Is It Time to Buy?
- Apple Comes to AT&T's Rescue
- My Top 10 Tech Toys for the Holidays
- iPhone a Better Gaming Platform Than Android?
- Dell Has Some Explaining to Do
- Dell May Start to Show Some Promise
- Has Twitter's Finest Hours (Seconds) Come and Gone?
- Intel's Andy Bryant Offers An Explanation
- Apple's Global Retail Invasion
- Intel Settles; AMD Settles the Score
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Why Amazon Rules Retail
- Wave of Debt Payments Facing US Government
- China Eastern to Complete Shanghai Air Buy by End '09
- Paul: Audit the Fed
- The Social Media Gaming Threat
- Gold Will Collapse Like Oil Did in 2008: Charts
- Prepare For Large Decline In Stocks, Next Year?
- JAL Slides to Record Low on Bankruptcy Jitters
- Lyondell Urged to Consider Reliance Takeover Offer
- Can Murdoch Help Bing Challenge Google and Shift the Content Equation?
- HP's Mark Hurd
- HP Comes in As Expected; Is It Time to Buy?
- 9 Stocks That Play Rising Water Costs: Strategists
- Weis' Deal Likely Won't Change Big Money Contracts
- Gold Prices Can Double in 3 Years: Portfolio Manager
- Nov. 23: Unusual Volume Leaders
- Help Wanted—Please Run $4 Billion University
- Apple Comes to AT&T's Rescue
- How Many US Consumers Will Shop this Weekend?
- Tuesday's Heavy Dose of Data to Dictate 'Risk' Behavior
- World's Largest Share Issue Priced at Deep Discount
- Obama says Boosting US Jobs is Top Priority
- Why the Dollar Will Likely Stay Weak for Some Time
- Playboy to Outsource Most Magazine Operations: Report
- General Motors to Cut up to 9,500 Jobs in Europe
- EU Drops Proceedings Against Qualcomm
- Appeals Court Denies Microsoft's Alcatel Petition
RSS FEED
Tech Check
Text Size 
The surprises just keep coming with Cisco[CSCO
Loading...
()
] . First, a really good one. And then, a really, really bad one.
To say that pessimism ruled the roost when it came to Cisco Systems and its earnings expectations doesn't quite capture the glum mood on Wall Street about tonight's earnings report. Never mind a miss, I was told, it'll come down to guidance since there's little chance Cisco would be able to meet expectations, either on the top or bottom lines.
Instead, what does Cisco do?
It beats on both, reporting 32 cents a share in non-GAAP EPS, 2 pennies ahead of consensus, on nearly $9.1 billion in revenue, or $100 million better than analyst expectations. Both categories are substantially lower than 38 cents and $9.8 billion Cisco reported for its second fiscal quarter last year, but in the current climate, comparisons to any performances from what seems like a lifetime ago are almost irrelevant.
As you might expect, Cisco shares saw a nice bump from all this, up about 3 percent when the news broke. But that did a whip-lash inducing about-face when the company's guidance came out.
For the company's third fiscal quarter, analysts were anticipating flat earnings per share, something around 29 or 30 cents on slightly lower revenue than the $9 billion expected in its second fiscal quarter, or something close to $8.75 billion.
Chambers, true to form as far as candor is concerned, conceded that right now is "One of the most difficult times of my career" to offer any meaningful guidance. But he felt it necessary to offer some guidance in the spirit of transparency. He says Cisco now anticipates revenue to decline 15 to 20 percent during its third quarter compared to the same period a year earlier. That's well below the $8.85 billion to $9.35 billion range analysts were anticipating. And the news completely reversed the company's after-market share gains.
Cisco assumes order momentum and challenges, especially in January, will continue into the next quarter, says Chambers.
Cisco CEO John Chambers conceded that no one seems to know how long the global economic downturn might last, but that Cisco is actively preparing to take advantage of the turnaround when it "inevitably occurs," and that the United States will be the first country to see that turnaround and reap its rewards.
Chambers said he continues to be comfortable with the long-term growth rate of 12 to 17 percent. He called the company's second quarter a "solid" one, especially given the challenges a slow economy has created for companies around the globe. He talked about the ongoing, $1 billion cost realignment program at Cisco which the company hopes will be completed by its fourth quarter.
Cisco generated $3.2 billion in cash during the second quarter, what he says is the most by any tech company operating today, leading to $29.5 billion in cash on the balance sheet. It's the second highest level of quarterly cash generation ever, said Chambers. It's a key development especially as investors look to cash-rich, big-cap tech leaders as possible places to park their money in anticipation of some kind of economic turnaround.
US, UK, India, Russia and Italy saw negative order growth year over year. Customers in financial, automotive, and just about every other customer sector saw weakness. Chambers says total year over year product growth "continued to deteriorate throughout the quarter by 14 percent in Q2." And it has gotten progressively worse over the past three quarters.
"It is now clear we are in a global economic slowdown and for a company that operates in over 160 countries worldwide, we'll obviously be impacted," says Chambers.
Chambers did spotlight the success of its video conferencing technology Cisco calls "Telepresence," with the segment enjoying some success: 312 customers now using the technology, and Cisco adding 65 new accounts during the second fiscal quarter.
Chambers remains optimistic. Guarded, but optimistic nonetheless, even in the face of such disappointing Q3 guidance. The question now for investors is just how contagious that optimism might be. Or whether it is simply misplaced.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes