Chuck Robbins, CEO of Cisco Technologies Inc., speaks at a panel session at the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, January 17, 2017. Participating world leaders, influential executives, bankers and policy makers of 47- of the annual meeting of the World Economic Forum in Davos from 17 to 20 January.
Jason Alden | Bloomberg | Getty Images
Cisco shares fell 4% in extended transactions on Tuesday, after the company posted tax gains in the second quarter, which showed lasting struggles in its top product segment. However, the company’s results and quarterly guidance exceeded analysts’ estimates.
Here’s how the company did it:
- Earnings: 79 cents per share, adjusted, compared to 76 cents per share, as expected by analysts, according to Refinitiv.
- Income: $ 11.96 billion, compared to $ 11.92 billion, as expected by analysts, according to Refinitiv.
Overall, Cisco’s revenue fell slightly on an annualized basis in the quarter ended Jan. 23, according to a statement. Revenues fell for the fifth consecutive quarter. The weaker economy has diminished the company’s growth prospects, as have customers’ decisions to use cloud services to keep employees working efficiently while staying away during the coronavirus pandemic.
In the company’s product segment, Infrastructure Platforms, which includes sales of switches and network routers for data centers, Cisco generated revenue of $ 6.39 billion, down 3% year-on-year and more. greater than the $ 6.23 billion consensus among analysts surveyed by FactSet.
“The corporate market remains sluggish, driven by prolonged sales cycles and a continuing break in spending among some pandemic customers,” Chisco CEO Chuck Robbins told analysts in a conference call. While switching revenues were flat, routers and server revenues were declining.
The application unit, including Webex video calling products, generated revenue of $ 1.35 billion year-over-year and even below the FactSet consensus estimate of $ 1.40 billion. Webex now has 600 million “average quarterly users,” Robbins said.
In that quarter, Cisco raised its bid to buy network hardware company Acacia Communications to $ 4.5 billion from $ 2.6 billion. The company also announced plans to acquire cloud communications software maker IMImobile for $ 730 million and introduced third-party tool integrations for Webex.
In terms of guidance, Cisco said it expects 80 cents to 82 cents in adjusted earnings per share, with revenue growth of 3.5% to 5% in the third fiscal quarter. Analysts surveyed by Refinitiv expected 81 cents in adjusted earnings per share and $ 12.35 billion in revenue, which would generate a 3% increase in revenue. The quarter includes an extra week.
Except for the move, Cisco shares have risen about 9% since the beginning of the year, while the S&P 500 has risen 4%.
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