Cisco's GM beats guidance; product sales still slumping

Cisco's (CSCO) had an FQ3 gross margin of 62.7%, +140 bps Q/Q and -30 bps Y/Y, and above guidance of 61%-62%. That contributed to the quarter's EPS beat.

After falling 11% Y/Y in FQ2, Cisco's product revenue (76% of total revenue) fell 8% in FQ3 (share loss in multiple markets). Services revenue (heavily tied to past product sales) rose 3%, even with FQ2. Opex fell 2% Y/Y after falling 6% in FQ2.

$2B was spent on buybacks vs. $4B in FQ2. In spite of the sales weakness, free cash flow rose slightly Y/Y to $2.83B (exceeding net income of $2.6B). The deferred revenue balance is up 4% Y/Y to $13.2B.

Cisco now has $50.5B in cash/investments (much of it offshore), and $20.9B in debt.

CSCO +4.1% AH. CC at 4:30PM, guidance should be provided.

FQ3 results, PR

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Comments (3)
  • happyshorter
    , contributor
    Comments (1345) | Send Message
    Oh how nice results!
    Fell less then expected.
    Because no one expected it could grow.
    At this moment +7% After Hours.
    Still earning per share -8.7% vs Q3 2013.


    I saw recently a stock that beat both expectations AND had a huge revenue increase (not a lesser loss!), and it loss more then 10%.


    So no wonder that I try to avoid being long on the days companies report!
    This is a play: provide low guidance, one that you can easily beat.
    14 May 2014, 04:44 PM Reply Like
  • piano man
    , contributor
    Comments (70) | Send Message
    I guess you don't play poker
    14 May 2014, 04:50 PM Reply Like
  • defunkdreader
    , contributor
    Comments (181) | Send Message
    "We did what we said we were going to do"
    - Chambers in Q1 2013, repeated in Q1 2014.
    14 May 2014, 05:27 PM Reply Like
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