Cisco Systems Inc might be doing a little better than Wall Street expects, considering its technology and sales challenges. However, that does not mean the company is set to avoid layoffs in the coming months.
On Wednesday, Cisco released fourth-quarter earnings that illustrated its troubles as one of the tech industry’s giants competing in a rapidly changing environment. In a conference call with investors and analysts, Cisco executives said the company planned to cut up to 6,000 jobs, or 8 percent of its workforce. They offered no specific timeline for the cuts.
Fourth-quarter revenues, Cisco said, were US$12.36 billion, down from the US$12.42 billion seen in the same quarter a year ago. Net income was US$2.25 billion, or US$0.43 a share, down from the US$2.27 billion posted a year ago.
Using non-standard accounting common to many tech companies, Cisco had fourth-quarter net income of US$2.8 billion, or US$0.55 a share.
The results from the quarter were slightly higher than the US$12.14 billion in revenue, and per-share earnings of US$0.53 projected by a survey of analysts by Thomson Reuters.
Cisco’s chief executive John Chambers was a star salesman at IBM Corp early in his career. He has long sought to move Cisco toward the kind of software and business consulting that saved IBM when its computer hardware business stumbled in the early 1990s. In Cisco’s case, the goal is to sell governments and companies on developing new kinds of large, sensor-rich networks.
However, while this direction holds promise, it has yielded relatively little business. Cisco has also been pushing the “Intercloud,” a kind of high-performance series of cloud-computing systems.
“Cloud is an area where we are making significant investments to fuel our future growth,” Chambers said in the call, adding that significant earnings from this would not be coming any time soon.
The price of Cisco shares fell about 1.4 percent in after-hours trading.
“We are executing well in a tough environment,” Chambers said in a statement. The company’s business focus, he said, is in areas like “security, data center, software, cloud and Internet of everything,” or sensor-rich networks. All of these areas are growing quickly, and tend to be highly profitable.
While business in emerging markets and with traditional communications service providers continues to be weak, he said, growth in new areas such as advanced computer servers for data centers was encouraging.
“We’re far from finished,” Chambers said.
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