September 23, 2020

Cisco Profit Drops but Beats Forecast

SAN FRANCISCO — Cisco Systems’ streak of lackluster earnings continued on Wednesday as the company failed to jump start its slow-growing business.

The mixed results come as John T. Chambers, Cisco’s chief executive, forges ahead with an overhaul that is supposed to combat slow decision making while focusing the company on its core computer networking business. But the turnaround, which started last month, is expected to take some time.

Cisco’s reported net income in the fiscal third quarter fell 18 percent to $1.8 billion, or 33 cents a share, from $2.2 billion, or 37 cents, in the year-ago quarter.

The company, which sells routers and switches that direct Internet traffic, said revenue climbed 5 percent to $10.9 billion from $10.4 billion.

The adjusted income of 42 cents was above the low expectations of Wall Street analysts. They had expected 37 cents a share and revenue of $10.86 billion, according to a survey of analysts by Thomson Reuters.

Mr. Chambers said in a news release: “We have acknowledged our challenges. We know what we have to do. We have a clear game plan, and we are a company with a track record of market-shaping innovation. We thank our shareholders, employees, customers and partners as we transition to the next phase of Cisco.”

In an effort to reverse the slide, Mr. Chambers has kicked off a series of changes intended to focus Cisco on its products for telecommunications companies, hospitals and government agencies. In doing so, he has scaled back the company’s consumer division by killing its Flip video camera business and laying off 550 employees.

Last week, Mr. Chambers said he would take additional steps to streamline Cisco by revamping its complex management structure that had executives serving on a patchwork of “councils.” Instead of encouraging cooperation between business units, the councils created additional bureaucracy.

Cisco’s shares are down more than 30 percent over the last 12 months because of the slow growth. At the same time, the Nasdaq composite rose nearly 20 percent.

In after-hours trading on Wednesday, Cisco’s shares rose 3.8 percent to $18.44. They had dropped a penny in regular trading.

Article source: http://feeds.nytimes.com/click.phdo?i=a6383c885d1815ec1e0205bf7629738d

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