Cisco Says The Worst Is Over

Cisco (CSCO) was the first company to really warn that the economy was going into the toilet. Now it’s doing better, and July quarter guidance is strong.

Cisco CEO John Chambers on the economy, from Cisco’s earnings call: (Paraphrased.)

For the first time in many quarters, many of our customers are describing business momentum differently: stabilisation, levelling out, or having something reasonably solid beneath their feet. (After several quarters of deceleration.) Then they add that even though business is stabilizing, it’s still at a disappointing year-over-year growth number.

So the same goes for Cisco: For the July quarter, Cisco expects sales to drop 17% to 20% year-over-year, suggesting a $8.29 billion to $8.60 billion range, or a $8.45 billion midpoint. That’s better than the $8.26 billion the Street was expecting, but still a stunning shrinkage in Cisco’s business.

Cisco reported $8.2 billion in April quarter sales, a 17% year-over-year drop. That’s better than the $8.1 billion the Street was looking for. But it’s far below the $8.7 billion that Wall Street expected before Cisco guided way below consensus three months ago. Adjusted EPS of $0.30 also beat the Street’s $0.25 consensus.

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