gremlin/E+ via Getty Images Shares of Cisco Systems, Inc. (NASDAQ:CSCO) have quite a storied history, but in trading and investing, it does not matter where a company or stock has been, it matters where it is going. For many quarters, performance at Cisco has been one of very slow progress. The stock in turn has reflected the slow progress and really has been a zombie, slowly moving sideways to down for many, many months. Although shares are popping today, they are barely back to the $50 mark. Data by YChar ...

Core Insights - Cisco shares surged approximately 8% following the announcement of a 7% workforce reduction and quarterly results that exceeded analyst expectations [1][2] - The company reported $13.64 billion in revenue for the quarter, surpassing Wall Street's forecast of $13.54 billion, although this represented a 10% decline year-over-year [1][2] - Net income fell 45% compared to the previous year, yet still exceeded profit expectations [1] Financial Performance - Cisco's revenue decline marks the third consecutive quarter of sales decreases [1] - Networking sales dropped 28.1% year-over-year, attributed to challenging comparisons, but there was a notable recovery in order numbers [2] - Data center switching orders increased by double digits year-over-year, while campus switching and routing orders rose in the high single digits [2] Restructuring and Workforce Changes - The company is implementing a restructuring plan that will incur $1 billion in pretax charges, aimed at investing in growth opportunities and enhancing operational efficiency [3] - This marks the second significant round of layoffs in 2023, following a previous reduction of 5% of the workforce, equating to over 4,000 jobs [3] - Cisco had 84,900 employees at the end of fiscal 2023 prior to the layoffs [3] Strategic Focus - Orders related to artificial intelligence surpassed $1 billion, with revenue expected to ramp up in the first half of 2025 [2] - The CEO indicated that the company aims to utilize AI to improve efficiency in general and administrative tasks through automation [3]

Core Viewpoint - Cisco Systems reported a decline in both earnings and revenues for the fourth quarter of fiscal 2024, with a notable drop in product revenues, while security revenues showed significant growth [1][2]. Financial Performance - Non-GAAP earnings for Q4 fiscal 2024 were 87 cents per share, exceeding the Zacks Consensus Estimate by 2.35%, but down 23.7% year over year [1]. - Total revenues decreased 10.3% year over year to $13.64 billion, slightly beating the consensus mark by 0.9% [1]. - Product revenues, which account for 72.3% of total revenues, fell 15.4% year over year to $9.86 billion [1]. - Networking revenues dropped 28% year over year to $6.80 billion, while security revenues rose 81% to $1.79 billion [1]. - Service revenues increased 6.5% year over year to $3.78 billion, representing 27.7% of total revenues [1]. Regional Performance - Revenues in the Americas decreased 11% year over year to $8.07 billion, missing the consensus mark by 0.7% [2]. - EMEA revenues declined 11% year over year to $3.51 billion but exceeded the consensus mark by 5.08% [2]. - APJC revenues fell 6% year over year to $2.06 billion, missing the consensus mark by 1.79% [2]. Margins and Expenses - Non-GAAP gross margin expanded by 200 basis points year over year to 67.9% [2]. - Non-GAAP operating margin contracted 280 basis points year over year to 32.5% [3]. - Non-GAAP operating expenses were $4.83 billion, up 3.9% year over year, with operating expenses as a percentage of revenues increasing 480 basis points to 35.4% [2][3]. Balance Sheet and Cash Flow - As of July 27, 2024, cash and cash equivalents totaled $17.9 billion, down from $18.8 billion as of April 27, 2024 [3]. - Total debt decreased to $30.96 billion from $32 billion as of April 27, 2024 [3]. - Cash flow from operating activities was $3.7 billion, lower than the previous quarter's $4 billion [3]. - Remaining performance obligations (RPO) increased 18% to $41 billion, with 51% expected to be recognized as revenue in the next 12 months [3]. Guidance - For Q1 fiscal 2025, revenues are projected between $13.65 billion and $13.85 billion, indicating a 7.5% year-over-year decline [4]. - Non-GAAP earnings are anticipated to be between 86 cents and 88 cents per share, suggesting a 24.3% year-over-year decline [4]. - For fiscal 2025, revenues are expected to range between $55 billion and $56.2 billion, with non-GAAP earnings anticipated between $3.52 and $3.58 per share [4]. Stock Performance - Cisco currently holds a Zacks Rank 2 (Buy) [5]. - CSCO shares have declined 10.1% year to date, contrasting with the Zacks Computer & Technology sector's growth of 18% [5].

This article has been reviewed according to Science X's editorial process and policies . Editors have highlighted the following attributes while ensuring the content's credibility: The Cisco logo appears on a screen at the Nasdaq MarketSite on Oct. 3, 2018 in New York's Times Square. Credit: AP Photo/Richard Drew, File Cisco Systems is planning to lay off 7% of its employees, its second round of job cuts this year, as the company shifts its focus to more rapidly growing areas in technology, such as artific ...

Group 1 - Cisco Systems' shares increased in premarket trading after the company reported earnings that exceeded Wall Street's expectations and announced a 7% reduction in its global workforce [1][2] - The company's shares have declined approximately 10% since the beginning of the year, but they rose by 6% to $48.17 shortly before the market opened [2] - Cisco plans to invest in key growth opportunities to diversify its revenue, as its core networking business has faced pressure due to enterprise customers transitioning to cloud computing [2] Group 2 - Cisco shares formed a head and shoulders pattern from April 2023 to January 2024, indicating a potential market top, and a bearish death cross occurred when the 50-day moving average fell below the 200-day moving average [3] - Despite breaking below the neckline of the head and shoulders pattern, trading volumes have been low, indicating a lack of conviction in the downward movement [3] - Following the earnings report, investors should watch for resistance levels at $48.50, $50, $52.50, and $58, where selling pressure may occur [4][5]

Financial Data and Key Metrics Changes - Cisco reported Q4 revenue of $13.6 billion, exceeding the high end of guidance, and total revenue for fiscal year 2024 was $53.8 billion, down from $57 billion in fiscal 2023 [7][24] - Non-GAAP net income for Q4 was $3.5 billion, with non-GAAP earnings per share at $0.87, also above guidance [19][10] - The gross margin for Q4 was 67.9%, the highest in 20 years, reflecting a 200 basis point increase year-over-year [22][25] Business Line Data and Key Metrics Changes - Total product revenue was $9.9 billion, down 15% year-over-year, while services revenue increased by 6% to $3.8 billion [20] - Security revenue surged by 81% due to the acquisition of Splunk, with a 6% growth excluding Splunk [20] - Collaboration revenue remained flat, while observability revenue grew by 41%, with a 12% increase excluding Splunk [20][21] Market Data and Key Metrics Changes - Product orders increased by 14% year-over-year, with a 6% increase excluding Splunk, indicating a recovery from inventory digestion [22] - Public sector orders rose by 20%, enterprise orders increased by 13%, and service provider cloud orders grew by 5% [22] - Geographic product order growth was 15% in the Americas, 12% in EMEA, and 16% in APJC [22] Company Strategy and Development Direction - Cisco is focusing on integrating its networking, security, and collaboration teams to enhance product offerings and customer solutions [8] - The company is investing in AI, cloud, and cybersecurity as key growth areas, with a restructuring plan to improve efficiency and resource allocation [9][26] - The integration of Splunk is expected to enhance Cisco's capabilities in security and observability, driving further innovation [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a dynamic environment, emphasizing the importance of execution in growth markets [18] - The restructuring plan is aimed at reallocating resources to high-growth areas rather than merely cutting costs [26] - Management noted that customers are increasingly preparing their infrastructure for AI applications, indicating a shift in investment priorities [30] Other Important Information - Cisco returned $3.6 billion to shareholders in Q4, totaling $12.1 billion for fiscal 2024, representing 119% of free cash flow [11][25] - The company expects fiscal Q1 revenue to be between $13.65 billion and $13.85 billion, with a non-GAAP earnings per share guidance of $0.86 to $0.88 [26] Q&A Session Summary Question: Customer budget prioritization and AI initiatives - Management noted balanced demand across regions and sectors, with enterprise customers upgrading infrastructure in preparation for AI [29][30] Question: Impact of layoffs on fiscal '25 guidance - Management confirmed that the restructuring is embedded in the fiscal '25 guidance, focusing on reallocating resources rather than cost savings [34][35] Question: Concerns about restructuring amid growth - Management clarified that the restructuring is about ensuring agility in a rapidly changing market, not a response to declining demand [39] Question: Security performance and market dynamics - Management reported strong growth in security, with increasing customer adoption of new security solutions [41][42] Question: AI orders and revenue translation - Management indicated that AI orders are primarily from web scale customers, with enterprise adoption expected to grow [44][46] Question: Integration of networking, security, and collaboration - Management emphasized the need for cross-integration to enhance competitive differentiation and meet customer needs [50][51] Question: Cloud order growth and performance - Management acknowledged mixed results in cloud orders but expressed optimism about future growth as the market stabilizes [68][70]

Wednesday, August 14th, 2024Markets continued to make gains today, following a favorable Consumer Price Index (CPI) report for July and a solidifying notion that a rate cut from the Fed is on the way at its September meeting. After some erratic jumping around today, the Dow closed +242 points, +0.61%, while the Nasdaq barely eked out a green finish: +5 points, +0.03%. The S&P 500 and small-cap Russell 2000 were mixed: +0.38% on the former, -0.46% on the latter.At +2.9%, July CPI year over year — the Inflati ...

Core Insights - Cisco Systems reported revenue of $13.64 billion for the quarter ended July 2024, a decrease of 10.3% year-over-year, with EPS at $0.87 compared to $1.14 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $13.52 billion by 0.90%, and EPS also surpassed the consensus estimate of $0.85 by 2.35% [1] Revenue Performance - Total Remaining Performance Obligations (RPO) stood at $41.05 billion, below the average estimate of $42.31 billion from two analysts [3] - Networking product revenue was $6.80 billion, slightly above the average estimate of $6.76 billion, but represented a year-over-year decline of 16.3% [4] - Observability product revenue reached $248 million, exceeding the estimated $243.65 million [5] - Services revenue was $3.78 billion, surpassing the average estimate of $3.73 billion, reflecting a year-over-year increase of 6.5% [6] - Security product revenue was $1.79 billion, significantly above the average estimate of $1.64 billion, marking an impressive year-over-year growth of 81.1% [7] - Overall product revenue totaled $9.86 billion, exceeding the average estimate of $9.66 billion, but showing a year-over-year decline of 15.4% [8] - Collaboration product revenue matched the estimate at $1.02 billion, with a slight year-over-year decrease of 0.4% [9] Gross Margin - Non-GAAP gross margin for services was $2.66 billion, above the average estimate of $2.55 billion [10] - Non-GAAP gross margin for products was $6.61 billion, exceeding the average estimate of $6.34 billion [11] Stock Performance - Cisco shares have returned -4.3% over the past month, compared to a -3.2% change in the Zacks S&P 500 composite [11] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [11]

Key TakeawaysCisco is cutting 7% of its workforce, months after revealing a 5% cut in February.The company's fiscal fourth-quarter results beat revenue and earnings expectations.The results were helped by Cisco's $28 billion acquisition of cybersecurity firm Splunk in March. Cisco Systems (CSCO) is cutting about 7% of its workforce as it pivots to higher-growth areas like cybersecurity and artificial intelligence (AI), the company announced in an SEC filing alongside its fiscal fourth-quarter results. The m ...

Cisco Systems (CSCO) came out with quarterly earnings of $0.87 per share, beating the Zacks Consensus Estimate of $0.85 per share. This compares to earnings of $1.14 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 2.35%. A quarter ago, it was expected that this seller of routers, switches, software and services would post earnings of $0.83 per share when it actually produced earnings of $0.88, delivering a surprise of 6.02%.Ov ...