Cisco posts strong Q4, but plans to cut 4,000 jobs
The company marks records for earnings and revenue. But to hit its numbers in the quarters ahead, it will need to cut its workforce by 4,000 employees.
Cisco Systems delivered a strong fourth quarter as expected, and CEO John Chambers added that his confidence in "our ability to be the No. 1 IT company is increasing."
The company reported fourth-quarter earnings this year of $2.3 billion, or 42 cents a share, on revenue of $12.4 billion. Non-GAAP earnings for the fourth quarter were 52 cents a share.
According to Thomson Reuters, Cisco was expected to report earnings of 51 cents a share on revenue of $12.4 billion.
It's worth noting that Cisco estimates crept higher leading up to the results.
In a statement, Chambers noted that the company posted records for earnings and revenue, and customers are seeing Cisco as an architecture partner.
On a conference call with analysts, Chambers said that Cisco is "leading many of the technology transitions in the market which are increasing in pace." These transitions put the network in the center of cloud, mobility, bring your own device, and security.
Chambers added that Cisco's data center business grew revenue more than 40 percent in the fourth quarter. Enterprise sales were up 9 percent in the U.S., but in the Asia-Pacific region, Japan, and China orders were down 3 percent. Chambers said:
Along with economic challenges impacting several of our top five emerging markets, last quarter I described a continued slow recovery, and I haven't seen anything to suggest that this dynamic will change in the short term. But this recovery is more mixed and inconsistent than the others I have seen.
For fiscal 2013, Cisco reported earnings of $10 billion, or $1.86 a share, on revenue of $48.6 billion, up 5.5 percent from a year ago.
As for the outlook, Cisco said it expects a "slow inconsistent recovery" with revenue growth of 3 percent to 5 percent in the year ahead. For the first quarter, Cisco expects non-GAAP gross margin to be 61 percent to 62 percent with earnings per share on a non-GAAP basis to be 50 cents to 51 cents a share.
Wall Street is expecting first-quarter earnings of 51 cents a share on earnings of $12.45 billion.
To hit its numbers, Cisco said it will lay off 4,000 workers, or 5 percent of its global workforce.
The networking giant had $50.6 billion in cash, equivalents, and investments at the end of the quarter.
By the numbers:
- Cisco spent $5.94 billion on research and development in fiscal 2013.
- Fourth-quarter product revenue was $9.74 billion, up from $9.15 billion a year ago. Service revenue was $2.68 billion, up from $2.54 billion a year ago.
- Inventory as of July 27 was $1.48 billion, down from $1.66 billion a year ago.
This story originally appeared as "Cisco Q4 strong; CEO Chambers confident" on ZDNet.