Cisco's sales plummet but cash reserves grow


Cisco's sales plummet but cash reserves grow

Ian Grant

Cisco's sales sagged almost a fifth as profits plummeted in the fourth quarter, dragging down the world's leading communications equipment maker's full year results, but tight cost control grew the firm's cash pile.

Q4 sales dropped 18% year on year to $8.5bn, nearly halving net income for the quarter to $1.1bn. Sales for the full year were down 9% to $36.1bn, leaving net income for the period off by almost a quarter to $6.1bn, and earnings for the year lighter by 13.5% at £1.35bn.

Cash flows were $2bn, down from $3.5bn year on year, but flat compared to the previous quarter. Cash flows for the full year were $9.9bn, down from $12.1bn for fiscal 2008.

Cash, cash equivalents and investments were $35bn, up from $26.2bn at the end of fiscal 2008, and compared with $33.6bn at the end of the third quarter of fiscal 2009.

CEO John Chambers remained upbeat. He said the economic improvement showed up as rising sales, quarter on quarter. "If we continue to see these positive order trends for the next one to two quarters, there is a good chance we will look back and see that our tipping point occurred in Q4," he said.

Chambers said Cisco's goal was to become a "next-generation company".

"We see the network truly becoming the platform for innovation and new business models which are enabled by collaboration technologies," he said.

Over the past few months Cisco has moved from being a provider of networking equipment to taking a more active role in running datacentres, edging towards hosting unified communications services, and expanding its consumer product lines.

It launched its Smart+Connected Communities initiative, the first business initiative from its globalisation centre in Bangalore, India. This provides a blueprint for "smart cities" that run on networked information.

It also speeded up local innovation in China, and announced the opening of a green technology R&D lab with Tsinghua University.

During the year AT&T, BT and Tata Communications demonstrated the technical ability for a Cisco TelePresence user to call others on any carrier network with high levels of security and reliability.

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