Cisco Shows Strength In Q4, Chambers Proclaims Improving Outlook


Cisco closed out its fiscal 2012 strong, beating analyst estimates for both sales and profit in its fourth quarter thanks to better-than-expected gains in the U.S., in emerging markets and in the service provider segment. CEO John Chambers told analysts during Cisco's fourth-quarter conference call Wednesday that the performance suggests signs of improving, if still-cautious, customer spending.

For its fiscal fourth quarter, Cisco posted $11.7 billion in revenue, up 4.4 percent from the year-ago quarter's $11.2 billion. Cisco reported $1.9 billion in quarterly profit, up nearly 56 percent from fourth-quarter 2011's $1.2 billion. Both numbers were just above analyst estimates.

Overall revenue by geography for the fourth quarter was 7 percent in Americas and 9 percent in Asia Pacific, Japan and China, while Cisco saw a 5 percent decline in revenue for the struggling EMEA region.

In prepared remarks, Chambers hit many of his usual touch points, including that Cisco would continue to emphasize its core markets of switching, routing, wireless and security, and build up its other major priorities around collaboration, video, data center and business architectures.

Market trends, such as customers transitioning from 1 gigabit to 10 gigabit throughput speeds in data networking, are in line with where Cisco is placing bets, Chambers said, and Cisco is also seeing growth in its security profile -- particularly high-end firewalls and its Identity Services Engine (ISE) -- and its Unified Computing System (UCS) data center play, among other specific areas benefiting from those market trends.

"We are not just catching, we are very often driving and leading these transitions," said Chambers, who described Cisco's market share in its key markets as "the best I can remember."

For the full year 2012, Cisco posted $46.1 billion in revenue, up 7 percent over 2011, and $8 billion in profit, up 24 percent. Cisco saw gains in all of its major product lines during the full year, including 3 percent in switching, 2 percent in routing, 3 percent in collaboration, 19 percent in wireless, 12 percent in security and 87 percent in data center.

Discussion of Cisco's headcount has largely centered on the more than 13,000 employees it parted with over the past year, and the recent declaration that Cisco would cut an additional 1,300 people. But according to Cisco, it added another 1,400 in headcount during the fourth quarter -- more than half in emerging markets -- and will be ending the year with 66,639 employees.

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