Cisco Systems (CSCO) this afternoon reported fiscal Q1 revenue and earnings per share that easily beat consensus estimates.
Revenue in the three months ended in October rose 4.7%, year over year, and rose slightly quarter over quarter, to $11.26 billion, yielding EPS of 43 cents a share.
Analysts on average were expecting $11.03 billion and 39 cents a share.
The revenue number was ahead of the company’s own outlook, announced on August 10th, for revenue in a range of $10.86 billion to $11.18 billion.
Shares of Cisco are up 35 cents, or 2%, at $17.96 in late trading.
CEO John Chambers said Cisco had completed “the majority of our restructuring,” and that Cisco was organized to “successfully execute” even as the industry faces “limited capital spending.”
Cisco management will hold a conference call with analysts at 4:30 pm, Eastern, and you can catch it here. The call usually contains Cisco’s outlook for the current quarter, as well as details about the performance of various product groups.
For fiscal Q2, the Street is modeling $11.14 billion and 42 cents a share.
Cisco made $2.3 billion in cash flow from operations, and ended the quarter with $44.4 billion in cash and investments, down from $44.6 billion last quarter. The company bought back $1.5 billion worth of shares during the quarter.
Cisco said days of sales outstanding fell to 35 days from 38 days in the prior quarter, which inventory turns declined to 10.9 from 11.4 last quarter, on a non-GAAP basis. Product book-to-bill in the quarter was at 1 times.
Update: Ticonderoga Securities’s analyst Brian White, who has a Buy rating on the stock, writes this afternoon that the gross margin of 62.4%, while down from Q4′s 62.7%, but was well ahead of the 61.6% he’d predicted, and is “healthy,” in his opinion.
“Overall, the print looks clean with margin and operating profit upside relative to our estimates that are above the Street,” writes White. ” We believe this report reflects solid execution by the company in a very challenging market environment.”
Update: During the conference call, Chambers said the company sees Q2 revenue rising 7% to 8% from Q2′s level a year ago, which would equate to $11.14 billion to $11.24 billion, beating the consensus $11.14 billion. Earnings per share are expected in a range of 42 cents to 44 cents, above the consensus 42 cents.
Cisco shares are up 64 cents, or almost 4%, at $18.25 in late trading.
Update 2: Chambers reviewed some key stats of the business: Total “next-generation networking” routing orders rose 7%, but revenue fell 3%, year over year, to $2.1 billion. High-end routing equipment orders were up 11%, year over year, while revenue was up 4%. Mid-tier and low-end routing orders were up 4% but revenue declined 16%. “Telepresence” product orders rose 15% and revenue rose 9%. Cisco’s “unified computing system” equipment for data centers saw orders rise 122% and revenue rise 116%, and Chambers said the product category is now bringing in $1 billion a year if the quarter’s results are extrapolated to a 12-month “run rate.”
Switching product revenue of $3.7 billion was flat with the year-earlier period even though orders were up 10%. Chambers observed that work by the engineering, supply chain, and sales teams had helped to bring switch product gross margin back to the year-earlier level, and that it’s higher than overall product gross margin.
In total, product revenue of $9 billion was up 3%, while services revenue of $2.3 billion was up 12%.
Chambers remarked that the top ten countries by total sales volume in Q1 saw sales rise by at least 7% to as much as 43%.
China sales rose 27% and Brazil sales rose 28%. India, which is going through some “unique issues” as a country, said Chambers, saw sales decline 24%.
The company’s revenue from service providers rose by 16%, while public sector sales rose by 10%. Remarking upon the surprisingly strong public sector growth, Chambers added that US public sector sales rose 5%, with state government, federal defense and higher education sales all increasing, and federal civil government, local government and K-12 education spending declining, year over year.
Chambers remarked, “Customers understand and appreciate our strategy, our business changes, and product architecture.”
Chambers said he was watching very closely Europe‘s situation, India’s situation, and the flooding in Thailand, which has hobbled some manufacturing of electronics components.
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