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Cisco Reports Q4 Earnings – Lowers Guidance – Offers Cost Cutting Restructuring Plan

By John F. Heerdink, Jr.

Cisco Systems, Inc. (CSCO) reported Q4 earnings recently and forecasted its Q1 earnings below Wall Street Estimates as the pandemic outbreak resulted in low spend by its clients. The company laid down its restructuring plan for the first-quarter, which includes voluntary retirement and layoffs costing a one-time charge of about $900 million to begin this quarter.

CEO Chuck Robbins stated on the conference call “While our results reflect the ongoing challenges in the current environment, we executed well,” ,“As you would expect, the pandemic has had the most impact on our enterprise and commercial orders, driven by an overall slowdown in spending. We are seeing customers continue to delay their purchasing decisions in certain areas while increasing spending in others until they have greater visibility and clarity on the timing and shape of the global economic recovery.”

Fourth-Quarter Earnings Update:

  • Adjusted EPS of 80 cents per share reported versus expectation of 74 cents per share.
  • Revenue of $12.15 billion was reported, higher than an expectation of $12.08 billion.
  • Earnings per share rose 22% as the company reduced operating expenses by 9% and revenue declined by 9%.
  • Cisco’s Infrastructure Platforms unit comprising of switches and routers for data centers, generated $6.63 billion in revenue, down 16%, and above the $6.48 billion estimates.
  • Cisco’s Applications revenue that includes the sales of the Webex video-calling software reported $1.36 billion, a decrease of 9%, and below the $1.45 billion estimates.
  • The company informed that it’s Chief Financial Officer Kelly Kramer to retire from the company, but will continue until a successor is appointed.

First-Quarter Earnings Guidance:

The company forecasted fiscal first-quarter adjusted guidance of 69 cents to 71 cents per share and a revenue drop of 7% to 9%. Cisco announced a cut of $1 billion in costs on an annualized basis The company disclosed and confirmed its intent to acquire network monitoring company ThousandEyes for about $1 billion and smaller companies to help boost revenue such as $2.84 billion acquisition of Acacia Communications Inc. 

Cisco Systems, Inc. (CSCO) is a global technology leader that designs, manufactures, and sells Internet Protocol-based networking and other communications technology. To learn more about Cisco Systems, Inc. (CSCO) and to continue to track its progress please visit the Vista Partners Cisco Systems, Inc. Coverage Page

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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(Read Original Story: Cisco falls on disappointing quarterly guidance as revenue continues to drop in CNBC)


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