Cisco Q109 Results: Continued Profitability Despite Economic Turmoil

The latest company to report solid earnings results despite the economic turmoil is computer networking solutions provider Cisco, which released its first quarter 2009 fiscal year results Wednesday for the period ended October 25.

 

John Chambers, Cisco’s (News - Alert) chairman and CEO, said the company is continuing to be successful by focusing on the essential role networks play in business productivity.

 

“Just as we helped our customers tap the productivity and competitive advantages afforded by the first wave of the Internet, once again we are leading the transition in this second wave to create new business models built for speed, scale, flexibility and productivity, enabled by the network,” Chambers said in a Wednesday statement.

 

The envelope please: Cisco’s first quarter 2009 net sales were $10.3 billion, with GAAP net income of $2.2 billion ($0.37 per share) and non-GAAP net income of $2.5 billion ($0.42 per share).

 

“Cisco delivered solid revenue and earnings growth in what is clearly a very challenging global economy,” Chambers emphasized in the Wednesday statement. “Our strategy and focus for managing the business through this market transition is clear — we will manage and prioritize our resources, invest in innovation, and build even stronger relationships with our customers to help enable their success.”

 

In its earnings report, Cisco highlighted a number of other financial achievements and actions, including $1 billion repurchase of 46 million common stock shares (average price, $21.95), reduction in the number of days sales were outstanding in accounts receivable from 34 to 29 (compared with same period last year), and cash/cash equivalents/investments of $26.8 billion compared with $26.2 billion at end of fiscal 2008.

 

Frank Calderoni, Cisco’s chief financial officer, said the company’s financial performance during Q109 indicates an ability to maintain profitability during an economically uncertain time.

 

“With a focus on making calculated investments in strategic areas, continued prudent expense management, and a historical strength of effectively managing our financial position, we believe Cisco is well positioned to manage our business model going forward,” Calderoni said.

 

During Q109, Cisco’s business strategy included, as one might expect from such a large company, both organic and inorganic growth. It completed no fewer than three acquisitions: e-mail and calendaring software company PostPath (announced in August, completed in September); presence and messaging software company Jabber (announced in September, completed in early November); and home networking management software company Pure Networks (completed in August).

 

Cisco stocks (Nasdaq: CSCO) closed at $17.39 Wednesday, down from previous close of $18.33. As of 5:21 p.m. ET, the company’s shares had dropped a bit further in after-hours trading, to $16.41.