Cisco’s profit in its fiscal fourth quarter fell about one-third from a year earlier, while its sales increased only 3.3 percent, the company reported on Wednesday.
Net income in the fourth quarter ended July 30 was US$1.2 billion, down 36.3 percent from $1.9 billion a year earlier. Earnings per share declined by 33.3 percent, to 22Â cents per share from 33 cents for last year’s fourth quarter.
The results came amid a major restructuring at Cisco, aimed at refocusing the company on core businesses such as routing and switching.
“We’ve made significant progress on our comprehensive action plan to position ourselves for our next stage of growth and profitability, while delivering solid financial results in Q4,” Chairman and CEO John Chambers said in a press release reporting the financial results.
Cisco’s sales rose to $11.2 billion from $10.8 billion in the quarter. That figure beat the consensus estimate from analysts polled by Thomson Reuters. They had expected $10.98 billion.
Profit excluding certain one-time items was $0.40 per share, which slightly exceeded the analyst forecast.
Chambers vowed to accelerate Cisco’s restructuring, which so far has resulted in 6,500 announced job cuts, the elimination of the company’s Flip video division and other adjustments. The process will continue at an even faster pace and will take years, not quarters, he said.
“It would be very easy to rest upon the changes we have made. … That is clearly not what we will do,” Chambers said on a conference call to discuss the financial results.Â
He said Cisco is becoming an “aggressive, focused and simplified” company. Cisco is ahead of schedule on its plan to cut $1 billion from its annual costs starting in fiscal 2012, Chambers said.
In answer to analysts’ questions, Chambers said Cisco remains committed to its TV set-top-box business, though it will move out of the “connected home” business, leaving home networking to its Linksys unit. The WebEx online conferencing service will be sold as part of a larger collaboration architecture that also includes its Quad enterprise social-networking platform and MediaNet infrastructure. “We left it apart for too long,” Chambers said.
Cisco has already taken several steps in the restructuring, according to Gary Moore, the company’s recently appointed chief operating officer. It has sharply reduced the number of boards and councils in key areas, appointing accountable leaders instead, and has given regional sales teams more autonomy, he said. The company has realigned about 23,000 people in a company with a work force of just over 70,000. The overall goal is to be able to adjust to customer demands more quickly, Moore said.
In the long run, the changes Cisco is making now will help it become more competitive against rivals that are not going through the same process, Chambers.