Cisco Systems Inc yesterday reported a record quarterly performance, easily meeting its financial estimates, but caution on economic growth reflected in the comments of CEO John Chambers took some of the luster out of the results.
For the fiscal fourth quarter to July 31, company reported net income of $1.4bn, up 41% when compared to profit of $982m a year ago, on revenue that was up 26% at $5.9bn. It was the most-profitable quarter in Cisco’s history.
Despite this, the company’s stock fell 5% in after-hours trading. The main negatives to come out of the firm’s conference call were higher inventory than expected, expected seasonal first-quarter weakness, and comments on the state of the US economy.
Chambers, whose carefully measured comments are listened to closely by economists and industry analysts, took note of a growing caution, apparently caused by recent unexpectedly modest economic growth data, such as US jobs numbers.
Given recent economic data points, most of the CEOs that I’ve talked with view the economy as growing at a modest level and are a little more cautious in their optimism than they were a quarter ago, Chambers said.
Based on this, Chambers expressed a little bit more caution than before. For many quarters, he has expressed incremental levels of cautious optimism, so the subtle change in his words was noted by many observers.
However, Chambers also played this down, and emphasized that it was not a negative, but rather a caution on the speed of the recovery. For the current first fiscal quarter, the company expects revenue flat to up 2% sequentially.
I would say the seasonal effects are primary guidance here, Chambers said. I think we would have seen this guidance pretty close to this without the macro- issues. In things we can control, we feel pretty good.
For fiscal 2004, the company reported revenue of $22bn, a 16.8% increase on 2003. Net income at the GAAP level was $4.4bn, up from $3.6bn the previous year. At the pro forma level, income was $5.3bn, compared to $4.3bn.