After the close of bells yesterday, Cisco reported Q2 results for 2020. Overall, revenues were down 4% YoY, with non-GAAP EPS up 5%. In spite of a positive spin by management, the overall tone was negative.
- Product revenue down 6% YoY, with the much small service revenue up 5%.
- Infrastructure Platforms including routers, switches, and optical networking gear (representing over half of sales) down 8% YoY. This was balanced by the much smaller Security Systems up 9%.
- Americas led other geographic areas down 5% YoY.
- $300 million has been set aside for restructuring including job severance. The number of job cuts was not announced.
On the other hand, next year will bring the the rollout of 5G networking. This should be a huge boost for Cisco. But then again, on our third hand (??), the corana virus is still the unknown variable.
“I am incredibly proud of the innovation our teams continue to drive,” said Chuck Robbins, chairman and CEO of Cisco. “I am confident in our longterm growth opportunities as we help our customers build out the networks for the future.”
The reality is that their guidance for the upcoming quarter shows another revenue drop of 1.5 to 3.5%. Investors are not encouraged. In the pre-market, shares are down almost 5%.
Updated April 22, 2020