March 6, 2021

Cisco’s Profit Falls 36%

SAN FRANCISCO — Cisco Systems showed little sign of a turnaround in its latest quarter.

Cisco reported Wednesday that net income in the fourth quarter ended July 30 fell 36.3 percent to $1.2 billion, or 22 cents a share, from $1.9 billion, or 33 cents, in the same quarter a year ago.

The company said revenue climbed 3.3 percent to $11.2 billion, from $10.8 billion.

Weak spending by government agencies combined with slow decision-making has left Cisco adrift. But an overhaul that includes cutting more than 7,000 jobs and jettisoning products like the Flip video camera is expected to take time to lift the company’s results.

The company has long been considered a bellwether for technology spending, but its internal problems have made it a less reliable stand-in for the broader technology industry. Cisco makes routers and switches used by corporations and government agencies to operate data centers and telecommunications networks.

The adjusted income of 40 cents was above the expectations of Wall Street analysts. They had expected 38 cents a share and revenue of $10.98 billion on that basis, according to a survey of analysts by Thomson Reuters.

“We’ve made significant progress on our comprehensive action plan to position ourselves for our next stage of growth and profitability, while delivering solid financial results in Q4,” John T. Chambers, chief executive of Cisco, said in a statement. “As we start our next fiscal year, you will see a very focused, agile, lean and aggressive company, that is laser-focused on helping our customers use intelligent networks to transform their businesses.”

Cisco, based in San Jose, Calif., is trying to reverse its course after a nearly yearlong slump. The company has responded by cutting costs and overhauling its management structure to try to restore some its former glory. Last month, Cisco said it would cut 6,500 jobs through layoffs and buyouts along with selling a factory in Mexico. The company took a $772 million charge for the restructuring in the fourth quarter.

Those reductions come in addition to 550 jobs eliminated in April.

While Cisco struggled over the last year, smaller rivals like Juniper Networks performed relatively well. More recently, however, Juniper and Brocade Communications Systems, another maker of technology equipment, have warned of slumping demand for their products.

Cisco’s problems include a slowdown in spending by the public sector, which makes up around a fifth of its overall sales. Because of tight budgets, government agencies, public universities and hospitals are balking at buying big-ticket technology equipment, a situation that is not expected to change any time soon.

While Cisco’s main primary products face headwinds, some of its other businesses have shown strong growth in recent quarters, like phone systems, video conferencing and wireless products. Mr. Chambers is counting on these newer areas to lift the company as its more mature products make smaller gains.

But investors are focused on Cisco’s slow overall growth, and have sent the company’s shares down more than 40 percent over the last 12 months.

Shares of Cisco fell 33 cents, or 2.3 percent, to close at $13.73. They rose 41 cents, or 3.3 percent, in after-hours trading.

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