John Chambers doesn’t seem to be having as much fun as he used to, at least if Cisco’s earnings report is any indication. While the company met or beat expectations for its fiscal Q4, the news otherwise couldn’t have been fun to read.
Emerging markets were definitely under siege, at least in part to the changing post-Snowden environment. As the largest US vendor with the most public face, Cisco has been taking the brunt of the buy-non-American movement overseas. China revenues were down 23%, but Brazil wasn’t far behind down 13% with other emerging markets also lagging. Cisco doesn’t expect those numbers to rebound anytime soon either.
As many expected, there is another round of layoffs. Some 6,000 employees, or 8%, will be looking for alternatives over the next few months. They did the same sort of thing last summer, and it looks like folks expect next year to stay on the same trend. While emerging markets trends didn’t help, it’s more part of an overall trend away from expensive boxes and toward software (e.g. SDN) by Cisco’s customers that is forcing them to evolve.
That being said, the gloom was largely expected. Overall, Cisco’s $12.4B revenue managed to hold flat over the same period last year. Non-GAAP earnings of $0.55 was actually a couple pennies better than anticipated. Guidance for Q4 was for $12.1-12.2B in revenue, which was generally as expected if tepid.
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