Cisco Systems Inc. Earnings Cheat Sheet: Margins Shrink Again, Net Income Falls

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S&P 500 (NYSE:SPY) component Cisco Systems, Inc. (NASDAQ:CSCO) reported its results for the first quarter. Cisco Systems is a multinational corporation engaged in the design, manufacturing, and sales of Internet Protocol-based consumer electronics, networking, and other services related to communications and information technology.

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Cisco Systems Earnings Cheat Sheet for the First Quarter

Results: Net income for the networking and communication devices company fell to $1.78 billion (33 cents per share) vs. $1.93 billion (34 cents per share) a year earlier. This is a decline of 7.9% from the year earlier quarter.

Revenue: Rose 4.7% to $11.26 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: CSCO reported adjusted net income of 43 cents per share. By that measure, the company beat the mean estimate of 34 cents per share. It beat the average revenue estimate of $11.01 billion.

Quoting Management: “We delivered a solid quarter,” said John Chambers, Cisco Chairman and CEO. “We’ve completed the majority of our restructuring and have organized Cisco to successfully execute against our strategy of providing intelligent networks, architectures and integrated products that solve customers’ business problems. Even in times of limited capital spending, intelligent networks are being deployed to drive new business, revenue and consumption models, enable new customer and employee experiences, and drive efficiencies. Cisco’s leadership in networking, video, collaboration and cloud, offered together in an integrated architectural approach, uniquely positions Cisco as a strategic business partner.”

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the fourth quarter of the last fiscal year, net income fell 36.3% while the figure fell 17.6% in the third quarter of the last fiscal year and 17.9% in the second quarter of the last fiscal year.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 1.6 percentage points to 61.2% from the year earlier quarter. Over that time, margins have contracted on average 2.5 percentage points per quarter on a year-over-year basis.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 3 cents in the fourth quarter of the last fiscal year, by 5 cents in the third quarter of the last fiscal year, and by one cent in the second quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 3.3% to $11.2 billion in the fourth quarter of the last fiscal year. The figure rose 4.8% in the third quarter of the last fiscal year from the year earlier and climbed 6% in the second quarter of the last fiscal year from the year-ago quarter.

Looking Forward: The average estimate for the second quarter is steady at 36 cents a share. The average estimate for the fiscal year has remained at $1.49 per share.

Competitors to Watch: Hewlett-Packard Company (NYSE:HPQ), Juniper Networks, Inc. (NYSE:JNPR), Alcatel-Lucent (NYSE:ALU), Microsoft Corporation (NASDAQ:MSFT), Intl. Business Machines Corp. (NYSE:IBM), Extreme Networks, Inc (NASDAQ:EXTR), Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC), Motorola Mobility Hldgs. Inc (NYSE:MMI), NetGear, Inc. (NASDAQ:NTGR), and ADTRAN, Inc. (NASDAQ:ADTN).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

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