Cisco’s CFO is out as sales nudge forward but profits dip
Cisco Systems reported a better-than-expected 1% sales bump in the latest quarter while profits fell. Here are some key points from Wednesday’s earnings report.
What you need to know: Cisco posted its biggest fiscal first quarter ever with $12.2 billion in sales, up $100 million from last year. However, the company’s profits dipped 8.4%, to $1.8 billion, or 35 cents per share.
CEO John Chambers said he is happy with the results and that Cisco is “very comfortable in our strategy to deliver innovative solutions which enable the next generation of IT and the Internet of Everything.” However, Chambers acknowledged that Cisco, which sells networking hardware and cloud computing services, operates “in a tough environment,” but he said that the increasing digitization of the world presents Cisco with vast opportunities for growth.
In August, Cisco coupled its fourth-quarter earnings report with plans to cut 6,000 jobs, or about 8% of its global workforce, in an effort to cut costs and reinvest savings in growth areas like cloud computing. Cisco said on Wednesday that its first-quarter operating expenses included $318 million related to restructuring and other charges, which comes after the company predicted a pre-tax charge between $250 million and $350 million.
Cisco’s shares (CSCO) initially jumped in after-hours trading before declining about 1.4%.
The big number: Cisco’s last round of job cuts was only its latest in a series. The company cut roughly 12,000 positions in recent years due to declining hardware sales and increased competition. Quarterly sales in Cisco’s products division were essentially flat year-over-year at $9.4 billion. That’s a better than the 2% fourth-quarter decline posted by the unit, which saw its sales drop by almost 5% overall in the 2014 fiscal year. Cisco’s service unit fared better in the latest quarter with sales rising 4.5% to $2.8 billion.
The company said it expects overall revenue to grow 4% to 7% in the current quarter, just short of analysts’ expectations.
What you might have missed: Included in Wednesday’s earnings release was the announcement that Cisco’s chief financial officer, Frank Calderoni, plans to step down at the beginning of 2015. A former longtime IBM employee, Calderoni has been CFO since 2008 and has been with Cisco for a decade. The company plans to appoint Kelly Kramer, currently the senior vice president of business technology and operations finance, as his successor.