Cisco CFO: Restructuring Paying Off
08/11/11 - 10:20 AM EDT
NEW YORK (TheStreet
) -- Cisco's (CSCO)
wide-ranging overhaul of its business is starting to pay off, according to the company's CFO Frank Calderoni. The company posted decent fourth-quarter numbers
Wednesday after the bell.
"Our restructuring efforts are well underway and delivering results," Calderoni told TheStreet
, explaining that the company's most recent quarterly revenue came in at the high end of its guidance. "We're very pleased with the solid quarter that we just announced."
|Cisco's CFO Frank Calderoni
The switch maker, facing intense competition from peers HP (HPQ)
and Juniper (JNPR)
as well as a tough economy, also offered decent first-quarter guidance, predicting year-over-year revenue growth between 1% and 4%, in line with analysts' estimates.
Cisco, which has taken flak after three consecutive quarters of underwhelming results
, beat analysts' profit expectations by two cents and posted $11.2 billion in quarterly sales, above Wall Street's forecast of $10.98 billion.
After wrestling with weak public sector spending and lackluster execution, Cisco recently embarked on an extensive corporate overhaul, cutting its headcount
and revamping management, sales, services and engineering
in an attempt to get back on track.
With the tech giant aiming to shave $1 billion off its annual operating expenses, Cisco said that its actions are creating efficiency within the company. The company noted Wednesday that it has consolidated its separate switching, routing, and optical networking businesses into a sole core group and has merged its four software groups into one operating system group. Voice, social networking, and the company's WebEx conferencing technology have also been pulled together.
"Clearly, the focus for us over the last few quarters has been to get focus around the top five company priorities," said Calderoni. On the company's earnings conference call, Chambers laid them out: leadership in core businesses such as switching and routing; collaboration; data center; video and architectures for business transformation.
In switching, which makes up almost a third of Cisco's total sales, the company grew its fourth-quarter orders 6% year-over-year, although its revenue declined 4% as users continue their transition to lower-priced products
. Cisco's router revenue was also down 2%, despite a 17% hike in orders.
Revenue for Cisco's "new products," which encompass collaboration, wireless, data center and video-connected home, grew 7% year-over-year, accounting for 31% of the firm's total sales. Cisco's services revenue, seen as key to future earnings growth, grew 12% year-over-year, making up 20% of the firm's overall revenue.
Investors cheered Cisco's overall numbers and the impact so far of the restructuring, and drove the networker's shares up more than 14% in early trading on Thursday.
Calderoni also struck a positive tone on a potential increase in the company's share buyback. "Based on the market where it is right now, we plan to be opportunistic as it relates to our share repurchase moving forward," he said. Cisco will talk more about its share buyback program during the company's annual financial analyst conference next month, he noted.
Recent quarters have seen Cisco increase the scope of its share buyback, which totaled $1 billion during its third quarter but grew to $1.5 billion during its recent fourth quarter.
--Written by James Rogers in New York.
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