Cisco Systems CSCO shares are trading down over 1 percent after hours as the company confirms 5,500 jobs are likely to be cut. The networking and communications firm reported Q4 EPS $0.63 versus estimates of $0.60. Sales came in at $12.64 billion versus estimates for $12.57 billion.
Cisco will reduce its curretn 73,104 person workforce by up 5,500. In a preview note RBC Capital analyst Mitch Steves said a reduction of 20 percent appeared to extreme and said 10-15 percent reduction "would be fair."
Cisco Share Price Compared With Annual Full Time Employees (Source: CSCO,&calcs=include:true,id:price,,id:fulltime_employee_number,include:true&correlations=&zoom=custom&startDate=01%2F01%2F2006&endDate=&format=real&recessions=false&chartView=&splitType=single&scaleType=log&securitylistName=&securitylistSecurityId=&securityGroup=">YCharts)
Gross margins for Q4 were 63.1 percent compared with the year prior of 60.21 percent. Analyst Paul Silverstein from Cowen & Co. stated in preview note that gross margins were likely to remain above 62.5 percent for the foreseeable future.
Cisco Share Price Compared With Quarterly Gross Margins (Source: CSCO,&calcs=include:true,id:price,,id:gross_profit_margin,include:true&correlations=&zoom=custom&startDate=01%2F01%2F2006&endDate=&format=real&recessions=false&chartView=&splitType=single&scaleType=log&securitylistName=&securitylistSecurityId=&securityGroup=">YCharts)
Cisco sees Q1 2017 EPS of $0.58 to $0.60 versus estimates of $0.60 and revenue growth between negative one percent and postive one percent year-over-year.
CEO Chuck Robbins said:
"We continue to execute well in a challenging macro environment. Despite slowing in our Service Provider business and Emerging Markets after three consecutive quarters of growth, the balance of the business was healthy with 5% order growth."
Shares of Cisco closed Wednesday's regular session down $0.41 or 1.32 percent to $30.71. The conferenece call is scheduled for 4:30PM eastern time Wednesday and can be accessed by clicking here.
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