More than the impressive results in Q3 — Cisco beat expectations in revenue and earnings per share, even though both were down markedly from last year — it was Cisco’s guidance for Q4 that prompts some mild optimism. Cisco said it expects Q4 to be down 17% to 20% from last year’s fourth fiscal quarter.
That means Q4 revenue will range from $8.29 billion to $8.6 billion — up $100 million to $400 million from Q3’s $8.2 billion. So Cisco sees sales increasing sequentially, which is a promising sign.
Juniper, you’ll recall, said its Q2 should be flat with Q1 and CEO Kevin Johnson said more than once during the company’s quarterly conference call that signs of stabilization in customer spending are appearing. Cisco’s results and guidance underscore that impression.
Still, CEO John Chambers was cautious in his optimism during Cisco’s Q3 conference call. He says business, from a Cisco and customer perspective, appears to be stabilizing, or “leveling out.” But he added that visibility into a global economic turnaround is still limited and that there’s a “very real possibility” things could get worse before they get better.
He also said business is such that it “looks good for avoiding a broad-based layoff or salary reduction” at Cisco of 10% or more. Cisco employs roughly 66,000, and shed 760 jobs in Q3.
Chambers said, however, that Cisco will continue to restructure operations and realign resources towards growth markets, which could result in some focused headcount reductions.
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