Cisco Subnet An independent Cisco community View more

Cisco's Q3: revenue rises 5%, profit falls 18%

Word is Chambers has vowed to cut $1 billion in annual expenses.

Cisco reported its 3Q earnings and it was bleak as expected. Net income fell nearly 18% to $1.8 billion (33 cents/share) vs. $2.19 billion (37 cents/share) a year earlier. Revenue rose about 5% to $10.9 billion from the year earlier. The earnings met analysts expectations of 35 cents per share to 39 cents a share.

CEO John Chambers has said he wants to cut expenses by $1 billion, or about 6 percent, reports the Associated Press. The AP said Chambers will make cuts by eliminating jobs. The story indicates that Chambers believes it will meet its planned job cuts through an early retirement program launched in April. Will this be enough? That's unclear. Cisco may need to 4,000 to 5,000 jobs of the company’s 73,400 employees to meet its 6 percent goal, the AP figures.

BACKGROUND: Cisco offers early retirement to certain employees

Chambers quote included in its earnings announcement was equally bleak, but not without hope. "This quarter played out as we expected," he said.  "We have acknowledged our challenges. We know what we have to do. We have a clear game plan, and we are a company with a track record of market-shaping innovation.  We thank our shareholders, employees, customers and partners as we transition to the next phase of Cisco."

While this is only the second quarter where net income fell, it is the fifth straight quarter of shrinking gross margins, notes the Wall Street Cheat Sheet. Indeed, Cisco has seen its profits peter off in the years since John Chambers took on the chairman role in addition to the CEO. in November, John Chambers will be celebrating his five-year anniversary of operating the company without a boss, as both CEO and chairman of the board.

PETERING PROFITS: Is John Chambers still good for Cisco?

Cisco's revenues and profits since Chambers became chairman and CEO.

On the bright side, the company also shared a few of its highlights from the quarter including the completion of three acquisitions (newScale,  Inlet Technologies, Pari Networks) and the 500th customer of the Cisco Unified Computing System in Europe, the Gloucestershire Constabulary, a police department in England. Likewise, the Cisco CRS-3 Carrier Routing System now has 80 customers in more than 30 countries, including AT&T and Comcast.

But given the numbers, does Cisco have more bad-news moments to come like the shutting down of the Flip unit, and the cutting of 550 employees?

More from the Cisco Odd and Ends blog

Cisco CIUS tablet to be sold by AT&T

Cisco, Xerox take on Google, HP over cloud printing

Why didn't Cisco attempt to sell the Flip unit?

Expert: IPv4 addresses could soon be valued at $200 apiece

The eight most important commands on a Cisco ASA security appliance

Most IPv6-certified home network gear is frightfully buggy

Follow all Cisco Subnet bloggers on Twitter @ciscosubnet

Follow Julie Bort on Twitter @Julie188

Join the discussion
Be the first to comment on this article. Our Commenting Policies