Cisco Tries to Please, But Guidance, Margin, Layoffs Rule (Updated)

UPDATE: Cisco’s full earnings preview in detail is here.

Cisco ended the quarter with $52.1 billion in cash and cash equivalents, up from $50.5 billion just one quarter ago. CEO John Chambers also described this as the best non-GAAP earnings per share quarter in its history with net income of $2.8 billion on that basis. The company said that it repurchased approximately 61 million shares of common stock at an average price of $25.11 per share. This came to a total of $1.5 billion in the quarter.

One concern may be another drop in gross margin down to 55.9%. Last quarter, this margin had contracted to 60.7% from 61.5%.

24/7 Wall St. would remind readers that Cisco does not give guidance in its press release but does in its conference call. UPDATE 5:15 p.m. Eastern – GUIDANCE HAS BEEN RELEASED – sees earnings at $0.51 to $0.53 per share with revenues targeted flat to up 1% in the coming quarter! Those Thomson Reuters consensus estimates are $0.53 in earnings per share and $12.08 billion in revenues. If Russia and China are as large of concerns as we thought, the company skipped over that. Chambers said,

“We are focused on growth, innovation and talent, especially in the areas of security, data center, software, cloud and internet of everything. Our strategy is sound, our financials are strong, and our market leadership is secure. We have the team in place to deliver and are uniquely positioned to help our customers solve their biggest business problems.”

The company also gave an update on its buybacks in total as well as what lies ahead in buybacks. Chambers noted that The company’s remaining authorized amount for stock repurchases under this program is approximately $8.6 billion – with no termination date. As of the end of the quarter, Cisco had repurchased and retired a whopping 4.3 billion shares of its common stock at an average price of $20.63 per share, with that grand total coming to $88.4 billion spent since it began the stock buyback program.

Cisco shares closed up by 0.2% at $25.20 and the reaction was up almost 15 at $25.40 in the after-hours session. We would consider this as unfinished business until guidance is offered. Cisco’s 52-week trading range is $20.22 to $26.45 and the consensus analyst price target ahead of earnings was $26.03.

UPDATE 5:15 p.m. Eastern: Cisco shares have now gone down by 1% from the closing bell price to $24.95 on about 6 million shares. The guidance was not great, but the news that Cisco is dropping another 6,000 jobs (about 8% of its workforce) means the turnaround isn’t finished.