Cisco profits almost halved

 

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By Stuart Turton

Posted on 6 Aug 2009 at 10:50

Cisco has watched profits nosedive as the company faces up to "the toughest economic challenge of our lifetime".

Net income for Cisco's fourth quarter plummeted 46% from the same period last year, dropping from $2 billion to $1.1 billion.

Cisco is the world's largest manufacturer of computer-networking equipment, but has been hit hard by the global recession and enterprises slowing their upgrade cycles, with companies preferring to hold onto older equipment for longer. This conservative streak has knocked Cisco's quarterly sales down 18% to $8.5 billion.

However, as chief financial officer Frank Calderoni points out, comparing quarters is "a tough comparison, given that Q4 2008 was the highest revenue-generating quarter in Cisco's history."

Indeed, if you compare full year numbers the situation isn't quite so dire. Net income fell from $8.1 billion in 2008 to $6.1 billion in 2009, a fall of 23.8%. It was enough of a glimmer for chief executive John Chambers to polish it into a shine.

"We saw a number of positive signs this quarter in the economy and in our business... while it is too early to say that this is a definite trend and therefore the much-anticipated recovery, the sequential-order numbers were very solid and more along the line of our normal, seasonal quarterly results for the first time in the last four quarters," he concludes.