Cisco Systems posts good profit numbers, sees growth in online video
Cisco reported first-quarter net sales of $9 billion, a 13 percent drop. Earnings per share were down 19 percent to 30 cents. The company also announced a share buyback, a strange move for such a great M&A machine. It said that on Nov. 4, its board of directors authorized up to $10 billion in additional common share repurchases. Cisco's board had previously authorized up to $62 billion in buyback's. Usually that arsenal would be used for more acquisitions, something Cisco seems to do every month.
During the conference call that followed the press release, CEO John Chambers said his customers were in a spending mood again and that the rise of Internet video was helping his company's prospects.
Cisco has an unusually bright future because of the array of businesses that Chambers has assembled. His company controls a great deal of the world's video transport as files move from the servers that store it to end users in both the consumer and business sectors.
It's easy to say that YouTube is Chamber's best friend, but that would be denigrating Cisco's strategy. Chambers understands that videoconferencing is replacing travel, online video is replacing the DVD, and portable devices will begin to rival the home TV as a source for video news and entertainment.
"TV Everywhere," a new rallying cry for large content companies, plays right into Cisco's strengths.
Douglas A. McIntyre is an editor at 24/7 Wall St.