Cisco Sales Fall 13 Percent; Networking Giant Beats Expectations

Calling the first quarter of FY 2010 “very strong given the challenges of the global economy,” San Jose, Calif.-based communications giant Cisco reported better-than-expected quarter results. The company also projected growth in the “one to four percent range” for the second quarter of FY 2010 from the year-ago period.

 

“We are starting to see solid indications of improving economic recovery throughout the world,” said Chairman and CEO John Chambers (News - Alert) during a conference call Wednesday after markets closed.

 

For the period ended Oct. 24, 2009, Cisco reported net sales of $9 billion, a 13 percent decline from the year-ago quarter. However, sales still exceeded analyst projections of $8.75 billion, according to reports.  

 

Cisco (News - Alert) reported net income of $1.8 billion, or 30 cents a share, a 19 percent drop from one year ago. However, Cisco posted earnings of $2.1 billion, or 36 cents a share, ahead of analyst expectations of 31 cents per share.

 

“Building off what we saw as a clear tipping point in Q4, our Q1 results continued to reflect strong sequential growth trends that meet or exceed expectations during normal economic times,” Chambers said in a statement released before the earnings call. “We view the improving economic outlook, combined with solid execution on our growth strategy, as creating unparalleled opportunity to drive more value into the core of the network. Simply said, we believe that key market transitions across collaboration, virtualization and video will drive productivity and growth in network loads for the next decade, and are evolving even faster than expected.”

 

During the call, Chambers pointed out a number of Cisco’s achievements, including four acquisitions and the launch of five new products and industry solutions.

 

Key activities included the expansion of its Cisco TelePresence portfolio with the single-screen, single-camera Cisco TelePresence System 1100; the launch of a “Borderless Networks Architecture” strategy and new Gen-2 routers; and the acquisition of video comunications provider TANDBERG ASA and Starent Networks (News - Alert), Corp., a supplier of IP-based mobile infrastructure.

 

“Our build-buy-partner innovation engine is clearly running on all cylinders, while our operational machine is pulling costs out of the business even as we scale new models for growth,” Chambers said. “Execution and results over time will demonstrate the long-term impact of this vision and strategy -- but a new model of productivity based on collaboration is clearly emerging and we believe this may be the most profound opportunity for businesses in our 25 years as a company.”