Cisco boosts sales but eats margin decline

Networking monolith grows top line but operating profits slump six per cent as restructure nears completion

Cisco swallowed a six per cent decline in operating income during its first fiscal quarter, despite revenue jumping almost five per cent.

Sales for the three months to 29 October were up 4.7 per cent on the corresponding period last year to $11.26bn (£7bn). But operating profit dropped six per cent annually to just over $2.2bn.

The networking giant has been on a restructuring and cost-cutting drive of late, leading to the divestment of certain non-core technologies and a reduction of more than 11,000 in its full-time workforce. The revamp is now almost complete, according to Cisco.

Chief executive John Chambers kicked off the operational restructure earlier this year by sending an astonishing 1,500-word letter to his employees outlining how the vendor has "lost credibility" as a result of poor execution. He claimed today's results represent a "solid first quarter" for his firm.

"We've completed the majority of our restructuring and have organised Cisco to successfully execute against our strategy of providing intelligent networks, architectures and integrated products that solve customers' business problems," he added.

"Even in times of limited capital spending, intelligent networks are being deployed to drive new business, revenue and consumption models, enable new customer and employee experiences, and drive efficiencies."