Cisco Profits Sink 27% Over Last Quarter

Dennis Faas's picture

Yet another major tech company has announced severely depressed quarterly profits. Cisco Systems, the network and communications giant that employs 66,000 people, recently revealed that it saw profits fall 27 per cent as the global economy continues its slide.

According to Cisco, for the three months prior to January 24 the company saw profits dip from $2.1 billion in 2008 to just $1.5 billion this year. As one might expect, quarterly sales were also down, dipping 7.5 per cent from the same period last year. (Source:

Company shares are down, too. Cisco earnings per share floated around 32 cents, down almost 16 per cent from their position a year ago.

Analysts Relieved

Surprisingly, some analysts are actually relieved. Many at Cisco and in the tech industry expected sales and profits to be even lower: "The numbers look pretty good, all things considered in the tough environment," shrugged RBC Capital analyst Mark Sue. Some analysts had predicted Cisco sales would fall as much as 12 per cent, much worse than the 7.5 per cent reported. Current share prices also beat expectations by about 2-3 cents per share.

Cisco's problems are worth following. Once worth $500 billion at the peak of the dot-com boom, Cisco is still the world's largest manufacturer of networking tools. The company has promised that it will continue to cut costs in an effort to maintain its place in the industry.

Most analysts will now turn to Cisco CEO John Chambers for a more specific plan to make his company more efficient while maintaining production and a world-renowned reputation. When he last spoke on matters, Chambers mentioned that he in fact foresaw a drop-off in sales. Thus, the company should, it seems, have been ready for this dip for some time.

In discussing the sales drop Chambers remarked, "Cisco showcased solid financial strength during a period of significant economic challenge."

Refusing to admit any panic, Chambers added, "We remain comfortable with our long-term vision and strategy as we move into new market adjacencies and prioritize our existing opportunities." (Source:

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