Cisco reported first quarter net sales of $10.75 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.9 billion or $0.34 per share, and non-GAAP net income of $2.4 billion or $0.42 per share. Net sales grew 19.2% compared to a year earlier. Earnings per share rose 13.3% compared to a year earlier.
In its quarterly conference call, the company said it hit some "air pockets" in its sales forecasts and momentum during the quarter due to weakness in public sector spending, which represents 22% of the company's overall business, and the cable business. However, Cisco said its "big picture" outlook remains the same.
"Cisco delivered solid financial results, during a challenging economic environment. While we have seen capital spending moderate in some areas of our business, our execution in the areas we can control and influence speak to the success and relevance of the company's strategy," said John Chambers, chairman and CEO, Cisco. "Our position in the market, including continued product innovation, market share momentum and operational excellence, positions us for growth and flexibility well into the future as we strengthen our role as a trusted business partner to our customers."
Some highlights for the quarter:
- Cash flows from operations were $1.7 billion for the first quarter of fiscal 2011, compared with $1.5 billion for the first quarter of fiscal 2010, and compared with $3.2 billion for the fourth quarter of fiscal 2010.
- Cash and cash equivalents and investments were $38.9 billion at the end of the first quarter of fiscal 2011, compared with $39.9 billion at the end of fiscal 2010.
- Public sector spending was weak, especially in Europe.
- Cisco cited challenges in some sectors of its service provider business, especially its traditional cable business in North America, which is under pressure and orders are down significantly. The IPTV set-top business is expanding internationally.
- The company noted growing order volumes for its ASR 5000 (Starent) product line.
- Book-to-bill ration is below one.
- Looking ahead to Q2, Cisco expects revenue growth of 3-5% year over year. For the fiscal year, Cisco expects growth of 9%.
- Product margins were 64%. Service margins were 65.7%.
- Supply chain constraints are still tight but have been alleviated.
- At the end of the quarter, Cisco had 72,600 employees -- up by 1,900 over the past quarter.
