Sometimes being the tech barometer for the economy at large is an unenviable position. That's the spot Cisco Systems
The networking company reported second-quarter results last night, but more importantly for many, gave its outlook for the coming months. To put it bluntly, it ain't pretty.
Cisco's sales were down 2% to $4.7 billion from the year-ago quarter. That marks the eighth consecutive quarter beset by stagnating revenues.
Third-quarter sales are expected to be flat or down as much as 3%, sequentially. Q3 is traditionally the company's slowest, but the forecasted weakness is based on continued corporate spending delays. With abundant political and economic uncertainty, businesses just aren't investing in technology again. Cisco doesn't see an immediate reversal of that trend, either.
It wasn't all gloom and doom for the company, though. It earned $991 million, 51% ahead of the $660 million earned in last year's Q2. Excluding items, Cisco netted $0.15 a share, up from the year-ago's $0.09 and ahead of expectations by two cents.
Cisco is operationally solid -- particularly in the face of a harsh landscape. There was no margin deterioration, and the company's gross margin actually increased to 70.4% -- up from Q1's record 69.3%, and way above last year's 62%. Net margins improved as well, to 21% from the year-ago quarter's 13.7%.
Like a prizefighter shedding excess weight, Cisco is lean and ready to fight. According to CEO John Chambers, the company's been gaining market share over the last year, while its competitors' sales have declined dramatically. If that's the case, and given its monster margins, Cisco is poised for a knockout.
LouAnn Lofton owns shares of Cisco.