Cisco Sees Strong Demand, Announces 1,000 New Jobs

Strategic Insights -

Cisco Systems, a leading networking equipment supplier, has reported robust sales and earnings for the third quarter, with revenues and earnings per share exceeding Wall Street's expectations. The company's CEO, John Chambers, attributed the positive results to sequential growth across all major product categories, with particularly strong demand from US businesses. This marks a significant turning point in the technology spending recovery, with CEOs starting to loosen their purse strings on capital spending.

Key Takeaways:

  • Cisco reported sales of $5.6 billion in the three months to April, an increase of 22% over the same period in 2003.
  • Sales of equipment, as opposed to services, increased by more than 25% for the fourth consecutive quarter.
  • Earnings per share were 17 cents, up from 14 cents, with pro-forma earnings per share reaching 19 cents.
  • Cisco generated $2.4 billion cash from operations during the quarter, the strongest performance in its history.
  • The company plans to add 1,000 new employees, with most positions in the US across sales and engineering.
  • John Chambers attributed the strong demand to the US enterprise segment, which has seen its first major growth in a very long time.
  • CEOs are starting to loosen their purse strings on capital spending, indicating a potential turning point in the technology spending recovery.

Statistics:

  • $5.6 billion: Sales in the three months to April, an increase of 22% over the same period in 2003.
  • 25%: Increase in sales of equipment, as opposed to services, for the fourth consecutive quarter.
  • 17 cents: Earnings per share, up from 14 cents.
  • 19 cents: Pro-forma earnings per share, up from 15 cents.
  • $2.4 billion: Cash generated from operations during the quarter.
  • 1,000: New employees to be added, with most positions in the US across sales and engineering.

Sources:

  • [Cisco Systems press release]
  • [Wall Street Journal]
  • [Financial Times]