Beijing on November 5, "Business Week" article points out that Cisco recently announced first quarter earnings, not only improved profitability, but also quarterly profit exceeded analyst expectations and its own expectations. According to filing shows Cisco's first quarter revenue growth of 5%, far higher than it is in the 3 months before the expected 1% to 3% growth. First quarter operating margin and gross margin were 29% and 66%, also exceeding analysts expectations and Cisco own expectations. Cisco CEO John Chambers said at the analyst meeting, the profit margins in the last 4 years the company has achieved the highest profit margins.
Chambers said he believes the company is now at an important turning point. He believes the economy has bottomed out in the first quarter of 2009, began to rise from the second quarter, substantial recovery in the third quarter was. Chambers said: "Now that the economy is recovering."
Cisco highlighted, the company found that first-quarter orders in the U.S. market were flat year over year, with the last two quarters of the United States if the orders up to 20% less compared to the situation, we can see that now the situation has improved markedly . Although the phone from small businesses and the income of operators has been greatly improved, but Cisco's main revenue comes from the U.S. enterprise market. Pacific Crest analyst Brent Bracelin said: "We have seen Cisco's business recovery rate than we'd expected faster. Cisco seems to have embarked on a recovery path." In fact, Chambers is expected this quarter's business income will be positive growth, he even said the company will begin recruiting new staff to control, but he added that those restrictions will be concentrated in those aimed at promoting productivity growth or to help Cisco enter new markets position.
Cisco to remind the shareholders should not assume that the performance of the second half of this fiscal year will be able to maintain strong growth, given the job growth and sustainability of economic recovery are there large uncertainties, it is recommended not to change the Cisco analyst rating. Chambers said: "I just do not want too much of our own complacency."
Cisco also announced the expected results of this quarter, it said it expected revenue this quarter, an increase in the range of 1% to 4%. That the performance of Cisco consistent in recent years, Cisco reported second-quarter revenue over the years the average growth rate of around 3%. As the product mix and the high number of new products will be reduced, the company expects gross margin this quarter may decline.
Because Cisco is huge, wide variety of products, and health status as a representative of the Internet has a strong importance, so it's the ultra-expected earnings for the entire technology industry is an important good news. Bracelin pointed out that this meant that most of the performance of technology companies will exceed analyst expectations.
Some analysts have been asked about Chambers's long-term strategy, particularly its intention to purchase transactions and enter new markets adjacent to invest much money. Bracelin not in the list of these analysts. Bracelin said, because many companies are turning to virtual data center, Cisco's goal is to seize this rare opportunity for many years to seek greater development. In the largest enterprises in the transition years, when the virtual data center built its market leadership position. He said: "I think Cisco's approach is right, now to comment on Cisco's strategy is still too early to know we are just out of the economic recession of the darkest periods."
Of course, Cisco now seems I have ever seen is at its most confident state, perhaps, than any I've seen a number of companies are more confident. As Chambers noted that Cisco in the last month were four large-scale acquisition, including 30 billion purchase of wireless services infrastructure vendor Starent and professional manufacturer TANDBERG video conferencing. Furthermore, Cisco is clearly not mind the critics doubt its strategy. Because Cisco's board of directors approved a 10 billion U.S. dollars of the stock repurchase program. Chambers told analysts: "Some companies are trying to accelerate the company's chief executive officer of the pace of development, but few are doing we are doing, but few people can always stick."
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