Little prospect of European recovery, warns Cisco

Cisco CEO John Chambers has warned that he sees little prospect of a realistic European economic recovery in the next few quarters after its EMEA sales dropped 5% in the final quarter of its financial year, with product orders in the UK down 13% and even Germany not proving immune.

Download this free guide

Emerging revenue opportunities for the channel with digital transformation

Digital transformation is a phrase that means many things to many people but for it to have any real relevance to the channel then it needs to mean a chance to make money. This guide will share some of the recent developments in the channel and the latest thoughts about the issue.

Start Download

• Corporate E-mail Address:

  You forgot to provide an Email Address.

  This email address doesn’t appear to be valid.

  This email address is already registered. Please login.

  You have exceeded the maximum character limit.

  Please provide a Corporate E-mail Address.

• • I agree to TechTarget’s Terms of Use, Privacy Policy, and the transfer of my information to the United States for processing to provide me with relevant information as described in our Privacy Policy.

  Please check the box if you want to proceed.

• • I agree to my information being processed by TechTarget and its Partners to contact me via phone, email, or other means regarding information relevant to my professional interests. I may unsubscribe at any time.

  Please check the box if you want to proceed.

By submitting my Email address I confirm that I have read and accepted the Terms of Use and Declaration of Consent.

“The primary weakness was across all sections of Europe,” Chambers said on the vendor’s year-end conference call, “with most of our customers not foreseeing improvement in the near future.

“We are modelling Europe to be very challenging over several quarters [and] global public spending will also continue to be challenged,” Chambers continued.

The impact of the Eurozone slump was laid bare as even fast-growing emerging markets in EMEA – such as Russia – were unable to offset the core declines.

Despite the grim outlook, Chambers said he also saw a number of growth drivers that would ultimately balance these challenges.

“First, our solid position in commercial accounts and the strength of our channels, which we never should underestimate how key that is for us. Second, cloud and our ability to expand both our products and architectural wins in the datacentre. Third, Cisco’s expanding value with both traditional and new service providers and new partners, especially in growth areas such as cloud, video, mobility, open architecture and hosted UC,” he said.

Indeed, Cisco had much to be cheerful about, with both full-year and fourth quarter sales and profits heading in the right direction.

In the last three months of its fiscal 2012 Cisco made net sales of $11.7bn (£7.45bn) and net profit of $1.9bn, up 4% and 56% respectively on the year-ago quarter.

Full-year sales grew 7% over 2011 to $46.1bn, and full year net income grew 24% to $8bn, Cisco revealed.

Due in part to its cost-cutting drive and an ongoing restructuring programme, the results came in ahead of analyst expectations.

Image credit: Photo courtesy of Camknows/Flickr

Conference call transcript courtesy of Seeking Alpha