Cisco reported revenue of $9.1 billion, a 7.5% year-over-year decrease. Cisco generated $3.2 billion in cash in Q2 resulting in cash and investments of approximately $29.5 billion, the second highest level of cash flow from operations in any quarter. GAAP EPS were $0.26, a 21% decrease year-over-year and adjusted income was 32 cents a share, compared to analyst expectations of 30 cents a share. Cisco shares were up today from $15.54 to $16.35, a 3.22% gain.
Despite beating street expectations, CEO John Chambers also provided a grim forecast for the third quarter. While maintaining Cisco's long-term growth goals of 12-17% third quarter sales are expected to decrease 15-20%, or $7.8 billion to $8.3 billion, below analyst expectations of $8.7 billion. Additionally, Chambers noted restructuring layoffs of around 2,000 jobs, or 3% of their global workforce of 67,000.
It is my opinion that Cisco has both a strong management team and huge reserves of cash on their balance sheet; however, the time it will take for them to return to "normal" levels of growth is too far in the future. The UASBIG portfolio is currently overweight in technology. I reiterate my position on Cisco as the first name to cut from the sector in favor of more immediately profitable companies. There are just not enough catalysts within our investment horizon.