Chuck Robbins, chief executive officer of Cisco Technologies Inc., speaks during a panel session at the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 17, 2017. World leaders, influential executives, bankers and policy makers attend the 47th annual meeting of the World Economic Forum in Davos from Jan. 17 – 20.
Jason Alden | Bloomberg | Getty Images
Cisco stock fell 3% in extended trading on Tuesday after the company posted fiscal second-quarter earnings that showed enduring struggles in its top product segment. Still, the company’s results and quarterly guidance exceeded analysts’ estimates.
Here’s how the company did:
- Earnings: 79 cents per share, adjusted, vs. 76 cents per share as expected by analysts, according to Refinitiv.
- Revenue: $11.96 billion, vs. $11.92 billion as expected by analysts, according to Refinitiv.
Overall, Cisco’s revenue narrowed slightly on an annualized basis in the quarter, which ended on Jan. 23, according to a statement. Revenue declined for the fifth consecutive quarter. The weaker economy has dampened the company’s growth prospects, as have some customers’ decisions to tap cloud services to keep employees working efficiently while staying remote during the coronavirus pandemic.
In the company’s leading product segment, Infrastructure Platforms, which includes sales of data center networking switches and routers, Cisco generated $6.39 billion in revenue, down 3% year over year and higher than the $6.23 billion consensus among analysts polled by FactSet.
“The enterprise market remains soft, driven by some elongated sales cycles and a continued pause in spending amongst some customers brought on by the pandemic,” Cisco CEO Chuck Robbinwebes told analysts on a conference call.
The Applications unit, including Webex video-calling products, delivered $1.35 billion in revenue, flat year over year and just below the FactSet consensus estimate of $1.40 billion. Webex now has 600 million “quarterly average users,” Robbins said.
In the quarter Cisco raised its offer to buy networking hardware company Acacia Communications to $4.5 billion from $2.6 billion. The company also announced that it planned to acquire cloud communications software maker IMImobile for $730 million, and it introduced integrations of third-party tools for Webex.
With respect to guidance, Cisco said it expects 80 cents to 82 cents in adjusted earnings per share on 3.5% to 5% revenue growth in the fiscal third quarter. Analysts polled by Refinitiv had expected 81 cents in adjusted earnings per share and $12.35 billion in revenue, which would work out to 3% revenue growth.
Excluding the after-hours move, shares of Cisco have risen about 9% since the start of the year, while the S&P 500 index is up 4%.
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