Cisco Results Top Estimates

(RTTNews) - Cisco Systems, Inc. (CSCO), the world's largest computer networking gear maker, said Wednesday after the markets closed that its fourth quarter profit fell 1% from last year, as revenue declined 0.5% and operating expenses rose.

However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.

"We are executing well in a tough environment and delivered our best non-GAAP earnings per share quarter in our history," said John Chambers, Cisco chairman and chief executive officer.

Cisco shares are currently losing 1.1% in after hours trading after closing the day's regular trading session at $25.20, up 5 cents. The shares trade in a 52-week range of $20.22 to $26.45.

For the fourth quarter ended July 26, 2014, the San Jose, California-based company reported net income of $2.25 billion or $0.43 per share, compared to $2.27 billion or $0.42 per share for the year-ago quarter.

Excluding items, adjusted net income for the fourth quarter was $2.84 billion or $0.55 per share, compared to $2.85 billion or $0.52 per share in the prior year quarter.

On average, 39 analysts polled by Thomson Reuters expected the company to earn $0.53 per share for the fourth quarter. Analysts' estimates typically exclude special items.

This marks the fourth straight time in ten quarters that Cisco's profit has declined year over year. The company had been struggling with rising costs that threatened to derail its earnings growth. To reduce costs, Cisco cut thousands of jobs. In August last year, Cisco said it would cut 4,000 jobs, or 5% of its global workforce, to "rebalance" its employee base.

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 fell 0.5% to $12.36 billion from $12.42 billion in the same quarter last year. Thirty-seven analysts had a consensus revenue estimate of $12.14 billion for the fourth quarter.

Product revenue for the quarter fell 2.2% to $9.5 billion, while services revenue for the quarter grew 5.6% to $2.8 billion.

During the fourth quarter, Cisco repurchased about 61 million shares of common stock for an aggregate purchase price of $1.5 billion. The remaining authorized amount for stock repurchases as of July 26 was about $8.6 billion with no termination date.

Cisco's balance sheet looked rock solid. The company ended the fourth quarter with cash and cash equivalents and investment of $52.1 billion, compared to $50.5 billion at the end of the third quarter and $50.6 billion at the end of the fourth quarter of fiscal 2013.

Cisco is aggressively pursuing the acquisition-led growth strategy, diversifying its business and entering consumer markets. 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.

During a conference call with analysts, Cisco CEO John Chambers said the company will cut up to 6,000 jobs starting in its fiscal first quarter, with a restructuring charge of as much as $700 million.

During the call, Cisco forecast first quarter revenue to be flat to up 1% from a year ago, with adjusted earnings of $0.51 to $0.53 per share share. Analysts currently expect the company to earn $0.53 per share on flat revenue for the first quarter.

Juniper Networks, Inc. (JNPR), which competes with Cisco in the router industry, last month reported second quarter profit that more than doubled from last year, helped by higher revenue and a gain from a legal settlement. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue. However, the company forecast third quarter revenue and earnings below analysts' current consensus estimates.