Cisco kid gets all slow on the draw

Industry bellwether and network bits supplier also known as Cisco surprised the cocaine nose jobs of Wall Street by posting a shallower-than-expected 5.5 percent drop in quarterly revenue.

It was not as bad as it could have been because demand in regions like the United States and Northern Europe picked up and helped offset sluggish sales in emerging markets.

The company posted gross margins of 62.7 percent in its fiscal third quarter, up from 53.3 percent in the previous quarter and above guidance of 61 to 62 percent.

Cisco has been suffering as its server business faced competition from so-called software-defined networks (SDN) , which offer software that can run on cheap hardware. It has been saved by its Nexus 9000 switches, which can adapt to flows in workloads brought on by cloud computing, and big data.

Nexus 9000 grew to a user base of 175 customers, up from 20 customers last quarter.

Analysts shrugged and said that it was about as solid of a quarter as you can expect with some good margins.

Product orders in the US rose seven percent from one year ago, with enterprise and commercial orders rising more than 10 percent. Order strength in northern Europe was up four percent year-over-year.

The problems were in emerging markets where Cisco has been facings increased competition. Generally orders fell seven percent, with Brazil down 27 percent and Russia down 28 percent.

Cisco’s Chief Executive Officer John Chambers predicted a gross margin of 62.7 percent for the fourth quarter. Cisco had a net profit of $2.2 billion in the fiscal third quarter, down from $2.5 billion in the year-ago quarter.

The company increased its cash dividend in the third quarter to $0.19 per common share.

Cisco reported revenue of $11.5 billion, down from $12.2 billion a year earlier. Wall Street on average had expected $11.36 billion.