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Cisco posts bumper results amidst restructure

The networking giant impresses analysts with solid profit and record revenue.

Graph up

Cisco appears to have turned a corner after posting record revenue alongside solid profit growth in the company's second quarter results.

Net profits rose 43.5 per cent reaching $2.2 billion (1.3 billion) for the three months leading up to 28 January. Sales figures hit $11.5 billion.

The networking giant had a turbulent 2011, a year in which there were widespread job cuts and a major strategic refocus, although the company's UK CTO recently told IT Pro no more employees would be sent packing in 2012.

We are executing well on our three-year plan to drive earnings faster than revenue.

Products including Flip cameras and the umi home videoconferencing have been ditched along the way, after Cisco decided to turn back on its foray into the consumer sphere.

The company had repeatedly disappointed investors, but in the past few months Cisco has performed considerably better.

The results hinted at weaknesses in public sector buying power, largely thanks to austerity plans of Governments across the world, CEO John Chambers revealed in a conference call. Yet the company's core products, including switches and routers, brought in plenty of revenue.

Cisco's switching business saw eight per cent revenue growth. Switching gross margins have returned to where they were two years ago, again hinting the company is getting back to what it's best at. Routing also grew eight per cent in revenue.

"We are executing well on our three-year plan to drive earnings faster than revenue. Our operational focus continues to yield positive results - we hit our billion dollar expense reduction a quarter early - and our ongoing innovation enables our customers to solve their critical business needs," Chambers said.

"You will continue to see a focused and aggressive Cisco that is helping our customers use intelligent networks to transform their businesses."

The company is also making gains in the data centre, with its UCS servers acquiring 10,000 customers overall, with 3,000 in Europe.

Cisco has been benefitting from competitive weakness too, with Juniper Networks' fourth quarter results showing revenue below expectations and net income falling to $96.1 million from $190.2 million the year previous.

Read on for our Q&A with Cisco's vice president for enterprise Laurent Blanchard.

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