Cisco's switching sales grow to $3.75B, but net revenue drop, forecast raise concerns

Cisco (Nasdaq: CSCO) reported that fiscal Q1 2014 switching sales rose 3 percent to $3.75 billion as it saw an increase in the Americas and EMEA regions. But while Cisco's revenues rose 1.2 percent year-over-year to $12 billion, net profit dropped 4.6 percent to $2 billion.

The vendor said revenues were lower than its forecasts and profits were impacted by a one-time $237 million charge for a recent round of layoffs and its $257 million acquisition for the remaining stake in software defined networking (SDN) provider Insieme Networks.

Excluding exceptional items, the company posted earnings per share of 53 cents.

"While our revenue growth was below our expectation, our financials are strong, our strategy is strong and our innovation engine is executing extremely well. We remain confident in our long-term goal to be the #1 IT company in the world and help our customers solve their biggest business problems," said John Chambers, chairman and CEO, in the earnings release.

In addition to the switching business, Cisco reported that data center operations continued to grow strongly, up 44 percent to $601 million. However, service provider video equipment sales declined 8 percent, and NGN routing systems were 1 percent lower year-on-year at $2.04 billion.

On a regional basis, sales in the Americas and EMEA rose 2 and 4 percent to $7.32 billion and $2.93 billion, respectively.

One of the key concerns for investors is its forecast of an 8-10 percent revenue decline and 45-47 cents in earnings per share. Shares of Cisco were listed at $21.06, down $2.94, or 12.25 percent in morning trading on the Nasdaq stock exchange.

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

Earnings summary: Wireline telecom earnings in the third quarter of 2013

Related articles:
Cisco sharpens SDN focus with $683M Insieme purchase
Cisco: Cloud traffic to rise to 5.3 zettabytes by 2017
Cisco to lay off 4,000 employees even as fiscal Q4 revenues rise to $12.4B
Cisco shares jump 11.8 percent, reports "encouraging" net sales of $12.2 billion

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