Cisco CEO: ‘Not immune’ from layoffs but ‘customers moving ahead with projects’

RESEARCH TRIANGLE PARK – Cisco’s strong earnings report for its most recent quarter – plus a stock dividend and a boost in its financial forecast – combined to send the tech giant’s shares up 4% in after-hours trading Wednesday. And CEO Chuck Robbins told analysts in a conference call that business is good despite all the talk about inflation, recession and layoffs in the tech sector.

Cisco (Nasdaq: CSCO), one of the largest tech employers in the Triangle, recently implemented layoffs that hit some 5% of its staff. Others have fared worse. And Robbins, responding to a question from Tal Liani, Bank of America Merrill Lynch, seemed positive about jobs going forward.

“Yeah. Well, if you think about what occurred, there was a lot of companies that had a massive surge in employment, and we didn’t,” Robbins said. “But I think the thing that we’re seeing right now is that we’ve seen the sequential growth be in line and some — like it was toward the lower end. So, it’s not performing at the highest end, but I think that it’s in range.

“And if you — and I also shared that in Q3, our current forecast is also in line sequentially with historical ranges, which we normally don’t give. We just wanted you guys to have that visibility. So, look, it’s certainly an uncertain time, and I’m not — I don’t want to paint a picture that we’re immune and I don’t want to paint a picture that every customer is spending everywhere on everything. But we’ve been able to maintain and continue to see our customers moving forward with projects.

“And the one thing that was really encouraging for me was to see January as strong as it was, given our — the uncertainty around ’23 budgets.”

In the earnings release, CFO Scott Herren pointed out: “We continue to execute well, delivering better than expected results in revenue, record non-GAAP EPS and operating cash flow. We are raising our full year outlook driven by our growing recurring revenue base and RPO, along with our healthy backlog and the steps we have taken to improve supply. We have once again increased our dividend, reflecting the strength of our cash flow generation and our commitment to shareholder returns.”