Cisco beats Q2 expectations, increases dividend

On the route to success.

Cisco’s overhaul seems to be paying off as it posted better-than-expected Q2 earnings and increased its quarterly dividend. Nearly a year ago, CEO John Chambers acknowledged that the company needed to revamp itself after several disappointing quarters. The end result was a reduced consumer business and several layoffs that aimed to cut expenses by $1 billion.

Chambers said, “We achieved our goal of $1 billion expense reductions measured from a quarterly run rate perspective in the second quarter, one quarter earlier than our stated goals.”

The cuts helped earnings come in at $0.47 per share, topping the average analyst estimate while revenue of $11.5 billion also beat the Street. Cisco also increased its quarterly dividend by $0.02 to $0.08 per share.

Chambers said business grew in all of its segments in Q2 with the exception of the public sector, which was down 1%. He believes the public sector will remain tough over the coming months. For Q3, sales are expected to grow by 5-7%, translating to $11.4-11.6 billion, the midpoint slightly higher than the average analyst estimate of $11.46 billion.

Cisco Systems (CSCO : NASDAQ : US$20.00), Net Change: -0.43, % Change: -2.10%, Volume: 130,662,040

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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