Financial

posted on 08 August 2008 07:46

Cisco announced rock solid quarterly and full year results in every product area except storage, where there was a revenue decline.

Net sales in Q4 08 were $10.4 billion, up 10 percent on Q4 07's $9.4 billion. GAAP net income for Q4 08 was $2.0 billion ($0.33/share), 6 percent up on Q4 07's $1.9 billion ($0.31/share).

Full year 08 net sales were $39.5 billion, 13 percent higher than 2007's $34.9 billion. Net income for 2008 was $8.1 billion ($1.31/share) which was a 12 percent increase on 2007's $7.3 billion ($1.17/share).

Cisco product revenues fired up across all geographies and all categories ... except for one item in its Advanced Technologies Group. Overall ATG revenues grew 15 percent year on year to $2.6 billion. Product categories such as Security, Networked Home, Unified Communications, Application Networking Services and Video Systems all showed revenue increases but Storage was the one segment in decline, with a 14 percent revenue drop year on year.

This must be viewed as a lamentable performance when many, many storage suppliers are posting revenue increases. 

The leading competitor for Cisco storage networking products is Brocade which is buying Foundry Networks and thus expanding into the Ethernet networking market and competing with Cisco there.

In his prepared comments for the results, Cisco CEO John Chambers said he was pleased with Cisco's product pipeline and innovation leadership "across almost all of our product areas." Thus the storage area is implicitly criticized for an inadequate product pipeline and innovation leadership.

Perhaps this background provides a justification for Cisco's FCOE hurry-up marketing activities.

In the earnings call Chambers said Cisco was not likely to buy companies of the size of EMC but was likely to partner with them. He specifically mentioned EMC as a likely partner along with IBM, Microsoft and Intel.

Cisco's general outlook was encouraging with slight reservations.

^{[Chris Mellor.]}