Cisco (CSCO, Financial) released its fourth quarter and full year earnings on Wednesday, Aug. 12 after the stock market’s closing bell. The technology company reported revenue of $12.8 billion for the fourth quarter combining for annual revenue of $49.2 billion for the 2015 fiscal year. Revenue for the quarter was just above analysts’ average estimate of $12.65 billion while total revenue for the year fell just below the average estimate of $48.96 billion. Earnings per share for the quarter were $0.59 and for the full year earnings per share were $2.21. Earnings per share were slightly higher than estimates for the quarter and full year. Analysts had expected earnings per share of $0.56 for the quarter and $2.18 for the full year.
Overall, Cisco reported positive earnings results on point with analysts’ earnings estimates for the final quarter of the year. Revenue growth by segment was strongest in the Americas up 7% to $29.66 billion for the year. In the Europe, Middle East and Africa region revenue growth was 3% increasing to $12.32 billion for the year. As expected, revenue growth in the Asia Pacific, Japan and China region was down overall as China’s economic turmoil lowered sales in the country specifically. In the Asia Pacific, Japan and China region revenue was down 2% to $7.18 billion. While revenue was lower in the Asia Pacific, Japan and China region, exposure to China overall is minimal for Cisco as the entire APJC region only accounted for 15% of total revenue in fiscal year 2015.
The positive quarter’s results specifically showed in Cisco’s business segments. Revenue grew strongly across nearly all business segments with only Service Provider Video reporting negative revenue growth for the quarter and full year at -7% and -10% respectively. For the quarter and full year Cisco’s Data Center business segment reported the strongest revenue growth rate. For the fourth quarter Data Center revenue grew 14% from the comparable quarter and for the full year Data Center revenue was up 22%.
Innovation in Data Center overall was Cisco’s key spotlight for the year. The business segment generated $3.22 billion in revenue which accounted for 7% of revenue for the full year. Demand for Cisco’s Unified Computing System fueled revenue growth in the segment overall. Customers sought out Cisco’s UCS solutions for their virtualization, server and networking capabilities. The reduced costs for customers of utilizing Cisco’s Unified Computing System solutions are also a significant competitive advantage for the company.
Key leadership changes for Cisco announced in the third quarter also appear to be going smoothly. In May Chuck Robbins was appointed by Cisco’s board of directors to succeed John Chambers as the company’s chief executive officer. Robbins took the helm on July 26. In June Robbins announced his strategic appointments for executive leadership positions within the firm which also appear to be strengthening its leadership overall.
In 2016 investors can expect to see continued innovation and revenue growth at Cisco as the company continues to lead in the technology communications equipment industry. For the 2016 fiscal year analysts are projecting another year of revenue growth at 4% with earnings per share up 3.2% to an expected $2.28 for 2016. Year to date Cisco’s stock is up 0.31% with a market close of $27.90 on Aug. 12. With a fair value of $31.73 it appears to have further upside potential in the weeks ahead.
