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Cisco reports 13% drop in sales

Ian Grant

Network equipment maker Cisco reported a 13% drop in year-on-year sales to $9bn for the first quarter of its 2010 financial year, which pushed down earnings 19% to $2.1bn.

Cisco CEO John Chambers said the previous quarter had been a tipping point. "We view the improving economic outlook, combined with solid execution on our growth strategy, as creating unparalleled opportunity to drive more value into the core of the network," he said.

Chambers said collaboration, virtualisation and video would drive productivity and growth in network loads for the next decade. They were evolving even faster than expected, he said.

Chambers said that collaboration along the lines of the recent "ecosystem-shifting coalition" between Cisco, EMC and VMware "may be the most profound opportunity for businesses in our 25 years as a company".

"Our build-buy-partner innovation engine is clearly running on all cylinders," Chamber said, adding that execution and results over time would show the long-term impact of this strategy.

Despite Chambers' optimism, a change in accounting rules inflated Cisco's figures by $50m, and general and administration costs rose $45m to $440m despite tight cost control elsewhere in the organisation.

During the quarter Cisco expanded its telepresence portfolio, adding AT&T, BT, Orange, NTT, Tata Communications, Telefonica, Telstra and Telmex as telepresence service providers. The company also announced its borderless networks architecture strategy, together with its new-generation integrated services router, and said it would integrate its call centre products with Salesforce.com's latest cloud service for small and medium-sized companies to run their customer services completely in the cloud.


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