Cisco stock drops as earnings outlook falls below Street consensus

The maker of network services, videoconferencing tools and security software forecast fiscal fourth-quarter earnings of 81 cents to 83 cents a share on a 6% to 8% year-over-year increase in revenue, or a range between $12.88 billion and $13.13 billion. Analysts surveyed by FactSet estimate 85 cents a share on revenue of $12.85 billion.

The company reported fiscal third-quarter net income of $2.86 billion, or 68 cents a share, compared with $2.77 billion, or 65 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were 83 cents a share, compared with 79 cents a share in the year-ago period.

Revenue rose to $12.8 billion from $11.98 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast 82 cents a share on revenue of $12.57 billion.

For the third quarter, infrastructure sales rose 6% to $6.83 billion and applications sales rose 5% to $1.43 billion, while security sales gained 13% to $876 million from the year-ago period. Analysts had forecast infrastructure sales of $6.76 billion, applications sales of $1.44 billion and security sales of $859.9 million. Product sales gained 6% for $9.14 billion, compared with the Street’s estimate of $9.06 billion, and services revenue rose 8% to $3.66 billion, while analysts expected $3.49 billion.

“We are confident in our strategy and our ability to lead the next phase of the recovery as our customers accelerate their adoption of hybrid work, digital transformation, cloud and continued strong uptake of our subscription-based offerings,” said Chuck Robbins, Cisco chief executive and chairman, in a statement.

Over the past 12 months, Cisco shares are up 17% as of Wednesday’s close, compared with a 40% advance by the Dow Jones Industrial Average  DJIA, -0.48%,  of which Cisco is a component, a 40% rise by the S&P 500 index  SPX, -0.29%  and a 44% gain by the tech-heavy Nasdaq Composite Index  COMP, -0.03%.