Cisco results foreshadow bleak Q3

Cisco chief executive John Chambers

Cisco reported a drop in both revenue and profit during its second fiscal quarter and chief executive John Chambers predicted worse is to come during Q3.

For the three months to 24 January revenue was down 7.5 per cent on the same period last year and stood at $9.1bn (£6.3bn). Net profit, based on generally accepted accounting principles, was $1.5bn, a year-on-year drop of more than a quarter.

Chambers told analysts that he expects revenue for this quarter to plummet by as much as a fifth. He also revealed Cisco would accelerate its drive to cut operational costs, with up to 2,000 staff axed in the short term.

He also claimed no one could accurately predict how much the economic climate would deteriorate. Chambers refused to rule out layoffs of up to 10 per cent of his company's global workforce, which currently stands at about 67,000.

Discussing the networking giant's second-quarter performance, he said: " Cisco showcased solid financial strength during a period of significant economic challenge. We remain comfortable with our long-term vision and strategy as we move into new market adjacencies and prioritise our existing opportunities.

"We intend to accelerate the alignment of our resources to prioritise future growth opportunities, gradually decrease our operating expenses, while building even stronger customer relationships to position Cisco for ongoing, long-term market leadership."