Comment Articles

Cisco's in profit, all's right with the world?

Peter Judge ZDNet.co.uk

Published: 08 Aug 2002 16:39 BST

After recent weeks, Cisco's financial results have come as a double relief to the industry. Why a double relief? Well, not only did the company make a reasonable profit but, seemingly unlike almost everyone else we can think of, it appears to be free of queries on its accounting practices.

On a far smaller scale, the UK press has been carrying stories of an end to dotcom gloom symbolised by the fact that Lastminute.com, the online travel site, which marked the high-water mark of the e-business bubble, is still in business and is even slated to make a profit next year.

But despite these signs, I think the jury is still out. Will we return to "normal"? Or was the continuing boom of the last few years just a medium term, one-off, event caused by the spread of new technology into society? Might we just shift to a new state where we have to adjust to less hype, less glamour and more just-getting-on-with-the business-thank-you?

Cisco's results could certainly indicate the latter. The company made a good profit, but has predicted that growth would be in single digits -- that is positively unheard of moderation for the IT industry.

In the quarter just gone (the last in Cisco's financial year) the company made $772m, a big leap from the same quarter last year, when the company's profit of $7m, on a turnover of $4.3bn, was as close to break-even as you could get.

Cisco, we all thought, was thoroughly tied up with the dot-com boom, giving equipment to start-ups, sometimes in exchange for equity or on long finance deals. So when that bubble burst, it was hit. And the telecoms bust which came hot on the heels of the dot-com bust was just as serious for Cisco, since many of the service providers who went under -- having over-estimated the demand for broadband services -- were heavily in debt for the Cisco kit they were using.