Cisco Systems, Inc. (CSCO: Quote), the world's largest computer networking gear maker, said Wednesday after the markets closed that its fourth quarter profit rose 18.4% from last year, as revenue increased 6.2%.
The company's quarterly earnings per share, excluding items, beat analysts' estimate by a penny and its quarterly revenue just managed to beat analysts' forecast.
"My confidence in our ability to be the #1 IT Company is increasing. Our fourth quarter was a record on many fronts, with record revenue, and record non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share. In every case, we exceeded the midpoint of our guidance. We also generated $4 billion in operating cash flow in the quarter, another record," said Cisco Chairman and CEO John Chambers.
On a conference call with analysts, Cisco said it would cut 4,000 jobs, or 5% of its global workforce, to "rebalance" its employee base. The company also said it expects first quarter revenue to grow 3% to 5% from the prior year level, implying revenue of $12.23 billion to $12.47 billion. Additionally, the company forecast first quarter earnings of $0.50 to $0.51 per share. Analysts currently expect the company to earn $0.51 per share on revenue of $12.46 billion for the first quarter.
Cisco shares are currently losing 9.58% in after hours trading after closing the day's regular trading session at $26.38, up 6 cents. The shares trade in a 52-week range of $16.68 to $26.49.
The latest quarter marks Cisco's seventh consecutive quarter of higher profit following four quarters of year-over-year profit declines.
The company had been struggling with rising costs that threatened to derail its earnings growth. To reduce costs, Cisco cut thousands of jobs.
For the fourth quarter ended July 27, 2013, the San Jose, California-based company reported net income of $2.3 billion or $0.42 per share, compared to $1.9 billion or $0.36 per share for the year-ago quarter.
The latest quarter results include, among other items, a charge of $0.03 per share for the TiVo, Inc. patent litigation settlement.
Excluding items, adjusted net income for the fourth quarter was $2.8 billion or $0.52 per share, compared to $2.5 million or $0.47 per share in the prior year quarter.
On average, 34 analysts polled by Thomson Reuters expected the company to earn $0.51 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Cisco, which makes the routers and switches that direct computer and telecommunications traffic over corporate networks and the Internet, said total revenue for the fourth quarter rose 6.2% to $12.42 billion from $11.69 billion in the same quarter last year. Thirty-three analysts had a consensus revenue estimate of $12.41 billion for the fourth quarter.
Product revenue for the quarter increased 6.4% to $9.7 billion, while services revenue for the quarter grew 5.5% to $2.7 billion.
During the fourth quarter, Cisco repurchased about 47 million shares of common stock for $1.2 billion. As of July 27, Cisco had repurchased and retired 3.9 billion shares of its common stock for an aggregate purchase price of about $78.9 billion since the inception of the stock repurchase program. The remaining authorized amount for stock repurchases under that program is about $3.1 billion with no termination date.
In March, Cisco raised its quarterly dividend to $0.17 per share from its previous quarterly dividend of $0.14 per share..
Cisco's balance sheet looked rock solid. The company ended the fourth quarter and fiscal 2013 with cash and cash equivalents and investment of $50.6 billion, compared to $47.4 billion at the end of the prior quarter and $48.7 billion at the end of fiscal 2012.
Cisco is aggressively pursuing the acquisition-led growth strategy, diversifying its business and entering consumer markets. During the quarter, Cisco completed the acquisitions of Ubiquisys Ltd., JouleX, Inc. and SolveDirect Service Management GmbH. The company also announced agreement to acquire cybersecurity solutions provider Sourcefire Inc. (FIRE) for about $2.7 billion in cash.
Cisco is viewed as a technology-industry bellwether because it dominates the market for routers and switches. Since the company's latest results are for the full month of July, instead of June for many of the technology giants, they are also seen as an early indicator of industry trends.
Juniper Networks, Inc. (JNPR), which competes with Cisco in the router industry, last month reported a 70% rise in second quarter profit, helped by higher revenue and improved margins. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue. At the same time, the company gave an upbeat outlook for the third quarter.
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by RTT Staff Writer
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