Cisco sees hard times ahead

Networking giant and technology industry bellwether beats analyst expectations in second quarter but disappoints with outlook.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Kenneth Musante, staff writer

Click the chart to track Cisco Systems' latest share price.

NEW YORK ( -- The global economic downturn will continue to hammer computer networking giant Cisco Systems Inc., chief executive John Chambers said Wednesday.

In its current quarter, Cisco expects to see revenue decline between 15% and 20%, he said in a conference call with analysts.

Analysts expect to see revenue fall by 11% in the third quarter, according to a poll by Thomson Reuters.

Shares of Cisco (CSCO, Fortune 500) dropped about 4% in after-hours trading after adding 22 cents to close at $15.84 in the regular session.

For its fiscal second quarter ended Jan. 24, Cisco reported a 27% drop in net income, but came in ahead of analyst estimates on earnings and revenue.

Profit totaled $1.5 billion, or 26 cents per share, compared with $2.06 billion, or 33 cents per share, a year ago.

Excluding certain one-time charges, the company earned $1.9 billion, or 32 cents per share. Analysts polled by Thomson Reuters, who usually strip out one-time items, had forecast 30 cents per share.

Sales dropped almost 8% to $9.09 billion from $9.83 billion in the same period last year. Analysts had forecast $9 billion.

Because of its size and the number of markets in which it does business, Cisco is often considered a bellwether for the technology industry.

"This is going to make people sit back and realize that this economy is going to be even harder," said analyst Kenneth Muth with wealth management firm Robert W. Baird & Co.

Cisco has taken a number of measures to reduce costs and reorganize its business over the second quarter, including a hiring freeze. But Chambers expressed reluctance about cutting jobs in the near term.

"We are not going to consider (layoffs) at this time," he said. But he added, that if Cisco was forced to cut jobs, it would likely be a large cut of about 10% of its workforce. Cisco employed 67,318 workers worldwide at the end of the second quarter. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Novelty gifts for people with money to burn For those who've got the cash, these holiday gifts can really make a statement. More
The best stocks of 2014 This year has been very solid for stocks, but these 6 were the best of the S&P 500. More
14 biggest tech fails of 2014 2014 was chock-full of big failures in technology, from security snafus to executive gaffes. Here are the top ... er ... bottom 14. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.