Cisco fails to raise hopes

While much of the financial world eagerly awaited Cisco Systems’ earnings information, many didn’t hear the news they were hoping for: that things were looking up.

The company met fourth-quarter expectations, but its revenue decreased 25% and profits sank 86%. Cisco’s net income for the quarter was $163 million, or 2 cents per share. For the same quarter last year, Cisco had net income of $1.2 billion, or 16 cents per share.

“While we would like to say the bottom has been reached, I don’t think we are there yet,” said John Chambers, CEO of Cisco.

Cisco closed its fiscal 2001 with $22.9 billion in sales, which was an 18% increase more than the $18.93 billion posted in fiscal 2000. Cisco’s net loss for fiscal 2001 was $1.02 billion, or 14 cents per share.

Although Chambers sounded confident of the strength of the enterprise market, he believes the service provider market is still slow.

“The number of RFPs and size of them [are] absolutely down,” Chambers said referring to requests from IXCs and RBOCs.

The company had expected strong growth in optical equipment sales, but that didn’t happen in the quarter as planned. Cisco projected optical equipment would see sales between $3 billion and $7 billion for fiscal year, but Chambers conceded it “is not at a billion-dollar run rate.” However, the current run-rate for optical equipment was “up double digits sequentially versus last quarter,” Chambers said.

Cisco’s guidance for the next quarter doesn’t get any brighter. The company expects revenues between $4.09 billion to $4.3 billion, or flat to down 5% from Q4.