As Cisco Goes, So Goes...

Of course, this could all be a convenient excuse. Blame it all on the economy, and while we are at it, blame it all on 9/11, too.

Things aren't all gloom and doom. John Chambers talked about how his revenues from enterprise customers was flat, when this quarter was compared to the previous one. He cautioned everyone not to get too excited and said, "This is still too early to call this a possible turnaround [in the overall economy." Funny how no growth (vs. contraction) can get everyone's hopes up. My how times have changed.

Still, this quarter's numbers look a heck of a lot better than a year ago, when Cisco was awash in red ink. They have managed to dig themselves out of that hole: gross margins are much improved, sales are doing reasonably well (especially when compared to their competitors, who ramped up to supply the telecom market and were caught when that disappeared overnight).

Is Cisco out of the woods? Not by a long shot. Margins may be better, but people are buying cheaper routers and that further squeezes profits. The company has kept staff down, but probably needs to trim a few middle managers to cut costs even further. And while the company is selling truckloads of IP phones (estimates around 50,000 per month), it needs to find companies that are installing truckloads of PCs. So perhaps Chambers is right after all--when we start seeing that kind of growth, Cisco will be on the mend.