Cisco Systems (CSCO) will release its fiscal first-quarter results on November 16 after the closing bell. The company outperformed expectations in its fiscal Q4 results. The company also announced major layoffs following its last earnings release, and the company’s revenue slumped for three straight quarters.
Year-over-year revenue growth is expected to be between -1% and 1% in the first quarter based on the company’s guidance. Analysts expect the company to post a 2.7% decline in revenue on the quarter, with revenue reaching $12.34 billion.
Cisco is expected to post a $0.59 GAAP EPS.
Cisco is restructuring its business due to slow growth. The company’s revenue from networking switches and routers are not producing the same growth seen a year ago. The company plans to diversify into growth sectors, including: data center, collaboration and security.
Expanding further into these three key areas is the company’s plan to return to growth.
Cisco plans to layoff 7% of its workforce in the first-quarter, or 5,500 positions in low growth areas. The company stated that the layoffs will result in additional cash flow that will be reinvested in growth-producing operations.
The plan’s details are expected to be releases during the earnings conference call.
Investors will need to focus on collaboration and security data during the release. These two segments produced growth in fiscal 2016.
The company’s switch to subscription-based offerings is taking a hit on revenue, too. Subscriptions don’t provide the same initial cash infusion, but propel growth over time. Deferred revenue grew by 33% in the fourth quarter for subscriptions, and this is an indication that the company’s strategy is working.
Cisco is expected to return to growth in the fiscal second-quarter of the year.
The quarter is expected to be lackluster, with revenue declines and flat earnings. The company is expected to maintain its dividend.
