Cisco Profits Fall 24%, Sales by 22%

By Chris Preimesberger  |  Posted 2009-05-06 Print this article Print

Cisco Systems reports its revenue fell to $8.16 billion from $9.8 billion a year ago, in line with its February fiscal prediction of a drop of between 15 and 20 percent. Product sales decreased by 22 percent, while service maintenance sales climbed by 9.4 percent, Cisco says.

As it been quietly informing partners, customers and analysts over the last few weeks, Cisco Systems' sales performance slipped during the last three months, with its profits falling 24 percent during the fiscal quarter that ended April 25.

Cisco, by far the world's biggest supplier of IT networking hardware and software,  reported earnings of $1.35 billion, or 23 cents per share, down from $1.77 billion or 29 cents per share a year earlier.

Cisco's revenue fell 17 percent to $8.16 billion from $9.8 billion a year ago-right in line with its February fiscal prediction of a drop of between 15 and 20 percent. Product sales decreased by 22 percent, while service maintenance sales climbed by 9.4 percent.

However, the company's extraordinarily high gross profit margins were unchanged by the sales slowdown. Cisco reported gross margins of 64.1 percent compared with 64 percent  a year ago, slightly above the company's projection.

Cisco, among the world's most stable and successful IT companies, is nonetheless on a downward trajectory in sales. Last fiscal quarter, the company reported a year-over-year drop-off in sales of 7.5 percent, compared with a gain of 8 percent in the first quarter.

Cisco is not the lone sufferer in its sector. Analysts have noted that the networking business in general has suffered a major slump during the recession because many enterprise customers are holding off on purchasing network upgrades-which are nice to have but often not critically necessary to the performance of an enterprise.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel