(Bloomberg) — Cisco Systems Inc. gave a lackluster sales forecast for the current period, a sign that businesses and government agencies are spending less in the pandemic-driven recession.Revenue will fall 9% to 11% from a year earlier in the fiscal first quarter, which ends in late October, the San Jose, California-based company said Wednesday in a statement. Analysts on average had projected a decline of about 7%. Adjusted profit will be 69 cents to 71 cents a share, lower than Wall Street expectations of 76 cents, according to data compiled by Bloomberg.
Cisco shares fell about 4% in extended trading. The stock closed at $48.10 in New York earlier.
A large chunk of Cisco’s revenue comes from government agencies and small and medium-sized businesses. Many of these customers have cut spending to adjust to an economic slowdown sparked by Covid-19 lockdowns.
Chief Executive Officer Chuck Robbins is trying to reduce Cisco’s reliance on expensive proprietary hardware and increase sales of software and services. After returning to growth in 2018, revenue has started to decline again this year, showing how Cisco’s business is still exposed to economic cycles.
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