Cisco’s fourth-quarter results hit the street earlier today.
I would rate them a decidedly mixed bag. Cisco’s adjusted earnings for the quarter were about 31 cents per share, comfortably surpassing consensus estimates. Quarterly revenue fell within the range of consensus estimates at about $8.5 billion.
Compared to results in Cisco’s fourth quarter last year, earnings were off 46 percent and revenue was down 18 percent.
More disconcerting was Cisco’s guidance. CEO John Chambers said it was too soon to call a recovery and forecast another drop in quarterly revenue. Despite his reluctance to call a market bottom, Chambers said that Cisco “saw a number of positive signs this quarter in the economy and in our business.”
Yesterday, before the call, I suggested the following:
A key to how the market reacts, as always, will be the guidance provided by Cisco CEO John Chambers and his executive team. Analyst and investors will be listening closely to the tone as well as the substance of what is said. Sentiment – Is the market coming back and, if so, how much? – will be a critical factor in after-hours and next-day trading.
What analysts and investors got from Cisco was measured ambiguity and ambivalence. In the midst of the most punishing economic downturn since the Great Depression, they were hoping for something more definitive and hopeful.
Chambers, as noted above, provided some encouragement, pointing to product lines that were growing, business cycles that were beginning to gain a semblance of normalcy. He also said Cisco now was looking forward to growth, having completed an austerity program that resulted in layoffs of more than 2,000 employees in the last two quarters, a higher number than Cisco disclosed previously.
But despite noting that the fourth quarter delivered the first instance of sequential growth in product orders the company had experienced during fiscal 2009, he wasn’t ready to call it a trend, wasn’t prepared to shovel dirt on the downturn.
That reticence made an impression on those listening to what Chambers had to say. In after-hours trading, as of 7:10pm ET, Cisco shares were down 67 cents or 3.02 percent.