Cisco has encouraging quarter
But Chambers still cautious
For the three months to April 27, the company reported net income of $729m, compared to a $2.7bn loss a year ago, on revenue up 2% at $4.82bn. Earnings per share, at $0.10, beat the First Call analysts' consensus estimates, even though the top line was about $50m less than the same analysts expected.
For the year to date, net income was $1.12bn, compared to a loss of $1.02bn a year earlier, on revenue that was down 21% at $14.08bn.
"The third [fiscal] quarter has often been our seasonally slow quarter in terms of orders", said CEO John Chambers. "Literally, what a difference a year makes... It was nice to see revenue grow year over year, even if it was just a small amount."
In a statement, he said: "Last year was a classic downturn. We took the critical steps to position ourselves for the upturn, and we are beginning to see the very positive results."
Of the service provider market, Chambers said: "Until visibility into their own profit and growth returns, they will continue to spend very cautiously." He said that there is "not enough data" to predict a spending turnaround in the overall market, though he did refer, during a conference call yesterday to "the inevitable upturn".
"Today's economy is truly a show-me economy," he said, explaining that IT managers want to see improvements in their own revenue before buying. "It's unclear if our growth is down to market share gain, or of an upturn in the economy." As such, Cisco did not provide estimates for its fiscal 2003, which begins next quarter.
Chambers admitted that Cisco saw slumping sales in three key areas - high-end routers, optical networks and DSLAMs. The mix of revenue was roughly the same on last year, with the Access business, Services business and 'Other' business flat at 5%, 17% and 8% of revenues respectively. The mix between sales of routers and switches changed 1%, with routers down to 30%, switches up to 40%.
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