Cisco's cost cutting efforts drive revenues past analyst expectations

Cisco (Nasdaq: CSCO) was able to achieve what most onlookers thought would be impossible by beating out Wall Street analysts' fiscal Q4 earnings expectations through its ongoing cost cutting measures.

Cisco Q4 2011 results

Click here for visual details of Cisco's fiscal Q4 results.

During the quarter, Cisco reported $11.2 billion in sales, sailing past analysts' $11 billion forecasts.

At the same time, net income declined to $1.23 billion, or 22 cents a share, from $1.94 billion, or 33 cents, in the same period last year. 

Now, the big concern for investors is what CEO John Chambers will reveal in the company's outlook.

"They beat a low bar. A lot of it is coming from cost cutting, which we anticipated. In that sense it's a relief," said Joanna Makris of Mizuho Securities USA.

Hoping to realign its focus on its core product core and edge routing business, John Chambers took some drastic measures in recent months, including laying off 6,500 employees in addition to shutting down its Flip camera business and selling off its Mexican set-top box plant. The measures were designed to save the vendor $1 billion in annual costs.

These moves come at a time when Cisco's main competitors, including Juniper Networks, (NYSE: JNPR) have been gaining increased market share in the core and edge routing market.

Two topics that will likely have an impact on Cisco's outlook will be U.S. federal budget deficit and Standard & Poor's recent move to downgrade the U.S. credit rating to AA+ from AAA.

 For more:
- see the earnings release
- Bloomberg has this article
- Reuters has this article

Earnings summary: Wireline in the second quarter 2011

Related articles:
Cisco to reduce headcount by 6,500 to trim $1.3B in costs
Telmex employs Cisco for its new telepresence offering
John Chambers, Cisco: Wireline's most powerful people
Cisco takes lead in market share for packet optical transport

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