The drop in Q2 revenue included a 4 percent fall in product revenue, with NGN Routing, switching and data centre product revenue down 10, 5 and 4 percent respectively, while service revenue increased 5 percent. Growth areas included security products up 14 percent, collaboration up 4 percent and wireless growing 3 percent.
By geographic segment, revenue in the Americas was down 3 percent , EMEA flat and APJC down 3 percent. Product orders showed a slightly different trend, with growth of 4 percent in the Americas, EMEA down 4 percent and APJC falling 5 percent. Cisco's total product orders showed zero growth in the quarter, but the company said its book-to-bill ratio was over 1. It saw stronger demand from enterprise and commercial customers, while orders were down from the public sector and service providers.
Cisco's product gross margin fell slightly to 61.1 percent from 61.3 a year ago, due mainly to pricing and to a lesser extent product mix. Adjusted operating costs, excluding the gain a year earlier on the sale of the STB business, fell 2 percent to USD 3.8 billion, helped by a reduction in headcount. Compared to the end of Q1, Cisco shed 426 employees for a total 71,959.
The company's net profit fell 25 percent to USD 2.3 billion or USD 0.47 per share, still at the high end of its outlook. Despite the fall in profit and a 4 percent drop in operating cash flow, Cisco increased its quarterly dividend by 3 cents a share to USD 0.29. The company ended the quarter with total cash of USD 71.8 billion.
For the third quarter, Cisco forecast revenues flat to 2 percent lower year-on-year and EPS of USD 0.44-0.49.
