By Don Clark
Cisco Systems Inc. announced plans to cut 6,000 jobs, or 8% of
its workforce, as the technology bellwether reported another
quarter of declines in its recently completed fiscal year.
The Silicon Valley giant said fourth-quarter net income slid 1%
on revenue that edged down 0.5%, as Cisco continued to grapple with
weak demand in several countries and the slow uptake of its latest
generation of networking hardware.
Nonetheless, Cisco's numbers surpassed projections by the
company and Wall Street analysts.
On a conference call, Cisco Chief ExecutiveJohn Chambers
outlined the company's "limited restructuring." He also projected
flat first-quarter revenue growth to an increase of 1% and
per-share earnings, excluding certain items, of 51 cents to 53
cents. Analysts, on average, were expecting earnings of 53 cents a
share on flat revenue.
In May, on a similar call, Mr. Chambers had signaled signs of
improvement in May, reporting third-quarter results that were
better than the company had projected. He predicted revenue would
decline between 1% and 3% in the fourth period, an indication of
stronger sequential growth from the period ended in April.
That prediction prompted a jump in Cisco's stock price, which is
up about 12% so far in 2014.
In after-hours trading Wednesday, Cisco shares fell 1.5% to
$24.82.
Cisco, based in San Jose, Calif., is best known for routing and
switching systems that funnel data among server systems and around
the Internet. But the company has branched into many new markets
through acquisitions, including TV set-top boxes, videoconferencing
and computer security products.
The company recently announced plans to offer computer services
to other companies, based on a model the industry calls cloud
computing.
Cisco, whose customers include many kinds of companies and
telecom vendors, is often among the first to experience the effects
of new boom and bust cycles. The company signaled a year ago that a
slowdown was coming, moving to cut 4,000 jobs, or 5% of its
workforce.
The company's biggest business remains switching systems, a
field where it faces stiff competition from established vendors and
newer upstarts like Arista Networks Inc. It has recently introduced
a new switching system called the Nexus 9000 that has been
attracting orders, though Mr. Chambers has said it would take some
time for the hardware to show significant sales.
In all, Cisco reported net income for the quarter ended July 26
of $2.25 billion, or 43 cents a share, compared profit in the
year-earlier period of $2.27 billion, or 42 cents. Revenue declined
to $12.36 billion from $12.42 billion.
Adjusted to exclude items such as stock-based compensation
expenses and acquisition-related amortization, Cisco put its
earnings per share at 55 cents a share. Analysts on that basis had
expected per-share earnings of 53 cents on revenue of $12.14
billion, according to Thomson First Call.
Tess Stynes contributed to this article.
Write to Don Clark at don.clark@wsj.com and Tess Stynes at
tess.stynes@wsj.com
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