Cisco to Cut Jobs, Abandons Growth Projections

Beset by a flagging consumer business and the bottom falling out of the public sector on which it's ever so dependent coupled with competitive pressures, market share losses and pricing challenges in its core business, industry bellwether Cisco, the overextended networking giant, said Wednesday that it's going to lay people off.

It figures the best it can do is earn 37 cents-39 cents on earnings that may be up 2% to $11.05 billion however will more likely be flat year-over-year. It was expected to return 42 cents, unchanged from last year, on earnings up 7% to $11.62 billion.

Share on sales of $10

Wall Street expected Cisco to earn 37 cents a share on sales of $10.86 billion in fiscal Q3. To tell the truth it came in with revenues down 18% to $1.87 billion, or 42 cents a share, on earnings of $10.87 billion, up 4.8%. Gross margin fell from 63.9% to 61.3%. This year's quarter was a week shorter than last year's.

Cisco's signature switches, representing 31% of revenue, fell 9% to $3.3 billion - more often than not at the high end - during routers, 17% of revenue, were up 7% year-over-year to $1.9 billion. Product sales were up 2.8%. Service earnings were up 14% and new products were up 15% however altogether it was a comparatively mediocre showing in the best case.

The company said that its server business

The company said that its server business, which has alienated so many of its old OEM clients, was up 1,570 clients in Q3 to 5,400 total for an annualized run rate of $900 million.

Maureen O'Gara the most read innovation reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected research reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara