Cisco's Disastrous New Normal

Tyler Durden's picture

Back in November, when Cisco reported that instead of a 4% increase in revenues it would have an 8-10% collapse in sales (thank you NSA and Edward Snowden) we penned "Something Is Very Wrong With This Picture." And for those who hadn't seen the chart, we urge you to click on the hyperlink. Moments ago CSCO reported earnings, which just barely beat the already sharply downward revised estimates, but more importantly it provided guidance on what to expected in the next quarter. Well, instead of reporting it, here is a chart of how the Company's guidance looks now and relative to what Goldman was expecting CSCO would sell as recently as November. We like to call the new trendline: Cisco's disastrous new normal.

But that's not the worst news. The worst news, by far, was the following announcement from the conference call:


In other words, issuing incremental debt to fund maturities. We hope, for its sake, that like all the developed world's insolvent governments who do just that, that CSCO stock also doubles as a reserve currency. Then again, judging by the market reaction after hours, the answer is no.


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fonestar's picture

What happens when you collaborate with NSA.

derek_vineyard's picture

maybe their revenue is counted using the value of bitcoins?

James_Cole's picture saying foreign business & .govs don't want to buy NSA 'enhanced' swag from CSCO? Nah, that's crazy. This is all an evil communist plot from China!

TruthInSunshine's picture

Companies, buying back as many of their shares as they possibly can by selling as much debt in the form of low yield bonds (Thanks, Bernanke & Yellen!) as they can, and hiking dividends hand over fist, can't even beat their radically lowered earnings' targets.

0b1knob's picture

Routers have become a cheap commodity.   Like desktop computers.   The old profit margins are gone forever. Cisco meet Dell and Hewett Packard.  Remember Commodore?   Me neither.

synergize's picture

As long as CSCO can sell that crappy debt to pension funds everything is A-OK! 

Hmmm thats why I took all my pension money out and manage it myself...

UP Forester's picture

So, is this a belwether of digital-mining?

booboo's picture

but you just did, and the only router worth a shit in this "new normal" is a Porter Cable, at least you can build a nice cabinet with it that will hold your whiskey.

StychoKiller's picture

Hear hear!  Let's hear it for Porter-Cable!

Freddie's picture

LOL!  Let's see.  I am a company that needs a router.  I can buy Cisco/NSA spy shit for a premium or buy cheaper Chinese routers without Spy Shit? 

Tough call.

WonderDawg's picture

What makes you think those Chinese routers don't have Spy Shit?

kchrisc's picture

Soon you'll need three routers, one each from China, Europe and DC US. All with "spy shit" from their respective governments.

A Nanny Moose's picture

Encrypt, encrypt, encrypt.

StychoKiller's picture

Perhaps folks should modify them and turn them into ... wait for it... BATTLEBOTS!

Freddie's picture

Off course they do.  The Chinese are not (directly) violating my 4th Amendment Rights....that no longer exist. 

Crash Overide's picture

It will be intresting to see a Snowden list of hardware and software companies that have NSA backdoors built in kind of like what RSA did.


Just remember, Google is the NSA.

CrashisOptimistic's picture


It's hitting both IBM and Cisco hard.  China doesn't want their hardware.  China sales projections are in freefall.  They will build their own.

Freddie's picture

CSCO has a bad reputation for arrogance but IBM is even worse.  IBM has always been an Uncle Sam company since old man Watson. Selling computers to the NWO/Nazis.  Same people.

IBM is even shittier to deal with.  IBM is like dealing with the US govt and the Mafia.  Just like General Electric.  These upstate NY companies are among the nastiest scum bags.

Years ago had a meeting where some dumb ass decided to call IBM consultants.  Their solutions was a billion dollars and laughable.  You could easily do the whole thing with PCs and some software.

I am not sure if upstate NY Corning and Xerox are the same way.  Poor Xerox got robbed blind by Steve Jobs and Bill Gates.

pitz's picture

Both outfits have been infested with H-1B guest workers, while qualified American engineers beat on their doors, by the thousands, for the jobs. 

Freddie's picture

Yes.  Exactly.  They get in there and by the time the H-1B's are done - they control the place - almost no Americans get hired. 

Motorola became almost all Indian and it is one reason they fell apart.

Clowns on Acid's picture

Add, Juniper, and Citi to that profile....

WonderDawg's picture

I'm in the IT biz and I don't know of any American engineers that can't get jobs. They all have jobs if they're worth a shit, but there is no doubt the HIB infestation has brought down the market rate for their skills.

ThroxxOfVron's picture

According to MicroSoft even the CEOs of tech giants are H1B hot swap-able.

AGuy's picture

"I'm in the IT biz and I don't know of any American engineers that can't get jobs"

Give it a couple years as foriegners stop buying all US made hardware and software because the NSA fiasco. CISCO and IBM may be the first to see sales plunge, but we'll see EMC, NetApp, Intel, MS,  etc also see significant sales declines. Then you see lots of American engineers that can't find jobs or working for salary that pays half of what they currently get paid. The US gov't has pissed everyone off, and it keeps on getting worse every day.



nufio's picture

thank you!. This has been my experience as well. We interview tons of candidates (in one of the top 5 tech companies by market cap) and we hire anyone that meets the bar. In all these tech companies (ive worked in 2) its never managers that make the hire/no-hire decision its always the engineers themselves and I personally have never seen a bias towards h1b workers for hiring. if at all they are harder to hire in the US as they have restrictions on start dates etc. 

I am very suspicious of people who havent been able to find jobs in IT but are CS or engineering graduates. Of every 100 people I interview around 50% cannot write a program to reverse a string, 95 % cannot write an good dynamnic programming solution for anything. As I see it a lot of people have no business being in IT and shouldnt really expect to get a job because of a degree certificate.

But, the contractors throudh contracting comapanies are almost exclusively on L1 from india. But most of these are test/support roles, rarely dev. These are jobs that will probably be automated in 50 years.

Disclaimer: I used to be on an H1 B in the US but moved out.  

pitz's picture

Asking those sorts of questions in an interview environment is highly innappropriate, for starters.  Its like taking a beef heart to a surgeon and asking them to carve up dinner before you even consider using their services!   And there is tons of talent that simply can't even get an interview because most tech firms worth working for (ie: pay something that resembles a living wage) are receiving hundreds, if not thousands of resumes. 

Also, in my experience, it is generally the HR people who make the hiring decisions.  Engineers are explicitly not trusted with the task of hiring.  That's why there's so many H-1B's in the system -- the HR clowns were just looking for cheap, not for the best talent. 

pitz's picture

I know tons of engineers who are highly skilled, but their resumes aren't even given the basics of human consideration.  So they're sitting on the couch, while the foreigners are given the jobs.  "they all have jobs", nothing could be further from the truth. 

kchrisc's picture

Several firms that had IT support contracts with IBM would call my firm in to actually provide the support. IBM was too incompetent and their people all had unintelligible accents. The local branch manager would get fed up, call us and then pay us out of discretionary accounts. The branch accountants would turn a blind eye, as we were maintaining their PCs as well.

At one firm they were required to use their piece of crap CRM SW. We installed another for very little and got them up a working. The funniest part was that we "shuffled" their email, as we called it, so that their use of another CRM was seamless and unnoticed.

IBM also wanted to install a multimillion dollar document management system for each branch. The plan stalled at corporate, but we used some off the shelf SW to do the same for the branch for a few grand.

Their “solution” for a off-site T1 connection was the funniest. After 3-months, we called a few vendors and got some bids and they were up in less than a week using relatively inexpensive SMB routers. LOL


Prisoners_dilemna's picture

I suppose that's possible but wouldn't the chart reflect a 6000% increase since Feb 2013?!?


max2205's picture

And gs is proping it up....zzzzzz

spastic_colon's picture

along with the Naz comp....why is the comp up today when all of its largest cap weights were down?  and pls feel free to point out my stupidity.

disabledvet's picture

market weighted index if i'm not mistaken (which would mean i am agreement with you...this is a big deal...

spastic_colon's picture

you are correct.....i tried to calc the comp spreadsheet but now my brain is sore....maybe Tyler has an explanation somewhere

Freddie's picture

I thought CSCO was okay until they announced earnings after the close and it got crushed in AH trading.

Wile-E-Coyote's picture

fonestar says FUCK the NSA, he told me to say that.

whatthecurtains's picture

For Cisco yes, for AAPL, MSFT, GOOG, etc... it hasn't quite happened... yet.

mbutler101's picture

I was thinking the same exact thing. Blowback is a bitch. Keep your 'secure' devices Cisco. Fuck you. Hope your shit continues to crater.

augustusgloop's picture

"this is what happens, larry, this is what happens larry, when you fuck a stranger in the ass."

Freddie's picture

F You SillyCon Valley spyshit companies. 

Have another fundraiser and dinner for you muslim NWO stooge.

Yenbot's picture

My God FS, I actually UPVOTED you (self-loathing to begin in 5,4,3,2...) ROFL

gbresnahan's picture

"As soon as it warms up outside, I'm gonna buy me some routers"
- said no one ever.

HedgeAccordingly's picture

Tapir? – Fed Pres. Bullard to BTV: We have momentum for 2014, Expects inflation to accelerate toward 2% Target

JimS's picture

The "inflation to accelerate toward 2% Target" is an interesting line to point at. All the pundits, who "seem" to think "inflation" is sub-2%, never actually buy anything at stores that "normal" people shop. The CNBC crowd has "little' people shopping for them. All the products that 80+% of the population needs are going up sharply in price (i.e. propane etc.) If the FED keeps removing things from their CPI basket that "rise in price", the "stated" inflation rate can be kept at sub-2% for a fairly long time. Much the same as "money supply" growth-rates when velocity of money is near zero.