Cisco reported a slightly bigger drop in revenues in its fiscal fourth quarter to July, down 9 percent to USD 12.2 billion compared to an 8 percent fall in the previous quarter. Revenues were near the high end of its guidance. Earnings still increased 22 percent year-on-year to USD 0.62, helped by lower taxes.
The slowdown in the second half of the year meant full-year revenues dropped 5 percent to USD 49.3 billion. Cisco said it met its goal of over half of revenues from subscriptions and services during the year, at 51 percent. Annual earnings increased 1 percent to USD 2.64.
Quarterly sales were down in all regions, led by a 12 percent fall in the Americas. EMEA contracted 6 percent, and the APJC region was down 7 percent. Product revenues declined 13 percent, including a 16 percent fall in infrastructure platforms, while service revenues were flat. The adjusted gross margin was down slightly to 65.0 percent from 65.5.
Cisco said it executed well, "despite the very challenging environment". CEO Chuck Robbins said the group plans to rebalance R&D investments going forward to focus on new areas "so we can continue to offer customers the best, most relevant technology in simpler, more easily consumable ways". This includes the recent introduction of a Business Resiliency portfolio to help customers manage operations during the coronavirus pandemic.
On a conference call with investors, Robbins said Cisco also plans to reduce its expenses by USD 1 billion on an annualized basis "over the next few quarters", Reuters reports. The company also announced that CFO Kelly Kramer will retire from Cisco, but stay on until a replacement is found.
Cisco's product orders were down 10 percent in the past quarter, led by a 23 percent fall in the commercial sector. For the first quarter, the company forecast revenues down 9-11 percent year-on-year and an adjusted gross margin of 64-65 percent. EPS is estimated at USD 0.41-0.47.
