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Cisco Cutting 6,000 Jobs as CEO Forecasts Stagnant Growth

OWoN: The tally of flawed foreign policy and snooping takes its toll. And yes Dorothy, there is a recovery.




Bloomberg
By Peter Burrows
13 August 2014

Cisco Systems Inc. (CSCO) is cutting 6,000 jobs and forecasting little to no revenue growth in the current quarter amid a slump in demand from phone and cable companies, and weakness in emerging markets.

The world’s largest networking-equipment maker, which has about 74,000 employees, said it will take a pretax charge of as much as $700 million. Including the latest round of firings, which represent about 8 percent of the workforce, Cisco has eliminated more than 18,000 people over the past three years.

John Chambers, who is nearing retirement after almost two decades as Cisco’s chief executive officer, has been grappling with slowing growth for its market-leading routers and switches. Phone carriers and other large companies are replacing legacy network hardware with software that performs many of the same tasks. Sales in emerging markets won’t recover for several more quarters, Chambers said on a conference call.

“They’re making good progress, but this emerging market weakness is going to make things hard for Cisco for the next few quarters,” said Alex Henderson, an analyst at Needham & Co., who has a hold rating on Cisco’s stock.

Sales in the quarter that ends in October will be $12.1 billion to $12.2 billion, based on the company’s forecast for revenue to be unchanged or rise 1 percent. Analysts were projecting, on average, sales of $12.1 billion, according to data compiled by Bloomberg.

Market Shift

Revenue in the period that ended July 26 was $12.4 billion, the company said in a statement today, topping analysts’ estimate for $12.2 billion. Profit, excluding some items, was 55 cents a share, versus a prediction for 53 cents.

Cisco’s orders in the U.S. rose 5 percent, while those in Asia fell 7 percent.

Net income in the fourth quarter fell to $2.25 billion, or 43 cents a share, from $2.27 billion, or 42 cents, a year earlier.

Cisco faces a challenging shift as customers move from buying hundreds or thousands of proprietary machines with gross margins of 60 percent or more to software-defined networks that can run more efficiently on cheaper gear. The trend has been embraced by companies including Google Inc. and Facebook Inc.

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3 comments :

  1. Job = Just Over Broke
    Wed, August 13, 2014
    http://galacticconnection.com/job-just-broke/
    http://theeconomiccollapseblog.com/archives/job-just-over-broke

    If you are fortunate enough to have a job in America today, the phrase “just over broke” probably describes you. Yes, there are a handful of jobs that certainly pay very well, but most Americans that work for somebody else are just barely making it from month to month. More than half of all working Americans are living paycheck to paycheck, and more than half of all working Americans make less than $30,000 a year. That is an amazing statistic but it is actually true. Once upon a time, anyone that was responsible and that was willing to work hard could get a good job in America. But now those days are long gone. Instead, we live at a time when good jobs are disappearing and when the middle class is getting smaller with each passing year. In some homes, the husband and the wife are both working multiple jobs and they can still barely pay their bills. Something has gone horribly wrong, and yet our leaders just keep telling us how wonderful our economy is.

    One of the biggest things that has killed jobs in this country is the fact that the U.S. economy has been steadily merged into the emerging one world economic system over the past several decades. They call it “free trade”, but they never told us that we would be merged into a single global labor pool where we would be competing directly for jobs with workers on the other side of the planet that live in nations where it is legal to pay slave labor wages.

    According to Gallup, only about 1.3 billion people around the world work full-time for an employer at this point.

    But overall there are more than 7 billion people.

    This has resulted in the systematic deindustrialization of the United States and horrific decline in dozens of formerly great manufacturing cities.

    At the same time, we have also been losing millions of middle class jobs to technology. At this point, robots are even starting to replace warehouse workers and fast food employees. As robots become even more advanced and become even cheaper to produce, there will be less jobs available for the rest of us.

    Because there are fewer middle class jobs available, the competition for the remaining jobs has become incredibly intense. In recent years, millions of Americans have been forced to take just about anything that they can get. For those Americans, “just over broke” has become “just trying to survive” as they scratch and claw their way through life.

    And the cold, hard truth of the matter is that most of the country is steadily getting poorer. According to a study recently discussed in the New York Times, the “typical American household” is now worth 36 percent less than it was worth a decade ago. That is a staggering decline in just ten years.

    Meanwhile, the cost of living continues to rise.

    According to one recent study, 40 percent of all households in the United States are experiencing financial stress right now and the homeownership rate for Americans under the age of 35 is at an all-time low.

    In the old days, if you got your education, worked hard and did all the right things, it was just about an automatic ticket to the middle class.

    Today it doesn’t work like that.

    Instead, more Americans than ever are being forced to become dependent on the government. If you can believe it, Americans received more than 2 trillion dollars in benefits from the federal government last year alone.

    (Read entire article at link above)

    ReplyDelete
  2. THE BIG LIES GET BIGGER
    http://www.theburningplatform.com/2014/08/13/the-big-lies-get-bigger/

    Consumer spending accounts for 70% of GDP. The government apparatchiks, corporate media propagandists, and the Wall Street shysters assured the masses that the negative GDP in the 1st quarter and dreadful retail sales were solely the result of harsh winter weather, as if the weather in the winter is ever good. They were absolutely unequivocally sure that retail sales would soar once Spring arrived.

    The thing about retail sales is they aren’t lost. If you are snowed in for a few days and can’t buy that new pair of shoes, they’ll be there next week. The reality is if poor retail sales are really the result of weather, there is pent up demand that will be satisfied when the weather improves. In addition, harsh winter weather should increase the sales of items used to deal with harsh winter weather, shovels, salt, winter coats, long johns, etc.

    So here we are in July. Retail sales have been essential flat for the last three months. There has been no rebound. There has been no surge. When inflation is taken into consideration, real retail sales are falling. But still the stock market rises. It rises because it has nothing to do with reality. The average American is far poorer today than they were at the depths of the recession in 2009. Real wages continue to fall, despite the bullshit about a jobs recovery.

    The shit dumped by the media and the government is so deep, you need hip boots to wade through it. The reality is the .1% have been enriched by the Federal Reserve at the expense of the 99.9%. Retail sales will continue to stagnate, as the prices for energy, food, healthcare, tuition, clothing, and services rise relentlessly, along with taxes from local, state, and federal governments.

    The oligarchs are using the exact same game plan that blew up in 2008 – dole out gobs of consumer debt (auto, student) and try to convince the ignorant masses they are wealthier because they are driving a new GMC Yukon with a 0% down, o% interest, 7 year loan. The megacorps use the free money from the Fed to buy back their stock, pumping their EPS and the stock bonuses of the executives, while laying off thousands, and distributing 2% raises to the plebs. The Too Big To Trust Wall Street titans take the free candy from the Fed, use their HFT supercomputers, and rig the markets with trillions in derivatives of mass destruction. The raping and pillaging of the middle class will continue until there is nothing left but bleached bones.

    This Wall Street fantasy world is interrupted every day with anecdotes from the real world, but the willfully ignorant public enjoys believing the lies as their normalcy bias overcomes their own eyes...

    So the pundits and propagandists for the ruling class continue to perpetuate the Big Lie of economic recovery, while the evidence in the real world proves it is a lie. Luckily for the oligarchs, if you trot out an “expert” with a degree from Harvard or an important title and instruct him to tell the people all is well and they are getting wealthier by the day, a large portion of the willfully ignorant will believe him.
    (Read full article at above link)

    ReplyDelete
  3. Market manipulation is at an all time high...but the bubble is about to break...


    The Wall Street Hype Machine Suddenly Breaks Down
    by Wolf Richter • August 11, 2014

    The stock manipulation game on Wall Street has been honed to perfection. Everyone is playing along with it, has to play along with it as part of their job, whether on Wall Street or in the financial media, and it must not be doubted or disparaged in any way. Best of all, it performs miracles.

    Or rather, it did work. Because now suddenly, the system is inexplicably broken.

    Wall Street analysts issue sky-high earnings growth expectations for distant quarters, based on pro-forma, ex-bad-items, adjusted earnings for the companies they follow. These earnings growth expectations are then bandied about to drive up the stock. Hapless souls who dare to point at reality as measured by GAAP-based financial statements are ridiculed; you don’t want to be backward-looking; oh no, you want to be forward-looking. And since no one knows the future, they just make it up.

    Market participants eagerly swallow this hook, line, and sinker – there’s nothing secret about it. As that distant quarter moves closer to reality, analysts start lowering their earnings growth expectations, and just before the company actually reports, those expectations are so low that the company’s financially engineered – via share buybacks and other schemes – pro-forma, ex-bad-items, adjusted EPS can most often beat it, even if it looks dreary under GAAP.

    This system benefits the stock price in two ways: at first via the sky-high growth estimates that rationalize the stock price; and then when the company beats the much lowered estimates. Companies that somehow fail to beat them get slapped on the wrist for a day or two. It works so well that stocks have done practically nothing but go up.

    So for example, on Friday, Bank of America Merrill Lynch supplied more fuel to the market that had been running on low:

    Non-financial EPS will rise 35% from 2014 to 2016 (following an expected large rise in 2014). That’s 10.4%/year, vs forecast GDP growth of ~3%/year. This would take profit margins from current near-record levels (depending on the metric) to amazing new levels, an interesting combination with the expected wage growth.

    That’s growth of ~130% over ten years, ~8.7%/year. That’s ~3x estimated GDP growth of 2.8% over that period. Especially impressive earnings growth since corporations have diverted so much cash flow (and borrowing) from capex to fund stock buybacks (much of which offsets exercises of executives’ options).

    Damn the torpedoes, full speed ahead. Everything soars, according to BofA. “Amazing new levels” of profit margins! Halleluiah. Everything is glorious and multiplies all the other glorious trends. Nothing can go wrong.

    “The future is too shiny for words,” grunted Wolf Street contributor Cali Money Man.

    So what exactly are they smoking at BofA? I don’t know either. But I know these estimates will come down as reality gets closer. They always do. By then they served their purpose of driving up stock prices. Or should have….

    Because now, suddenly there’s a problem.

    In its latest report on earnings expectations and reported earnings, FactSet found a startling change in how the market reacts to these fabricated earnings beats. Over the past five years, companies with upside earnings surprises saw their stock prices rise on average 1% from two days before the announcement to two days afterwards; and downside earnings surprises were punished with a 2.3% decline in stock price over the four-day window.

    SURPRISE, SURPRISE...
    (Read entire statistical article at link: http://wolfstreet.com/2014/08/11/the-wall-street-hype-machine-suddenly-breaks-down/)

    ReplyDelete

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