Chuck Robbins, CEO of Cisco Technologies Inc., speaks during a panel discussion at the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, January 17, 2017. World leaders, influential executives, bankers and policymakers attend the 47th annual meeting of the World Economic Forum in Davos from January 17th to 20th.
Jason Alden | Bloomberg | Getty Images
Cisco stock fell 3% in extended trading Tuesday after the company posted second-quarter earnings that featured ongoing issues in its top product segment. However, the company’s results and quarterly projections exceeded analyst estimates.
This is how the company did it:
- Merits: Adjusted for 79 cents per share compared to 76 cents per share, as analysts expected, Refinitiv said.
- Revenue: According to Refinitiv, $ 11.96 billion versus $ 11.92 billion as analysts expected.
Overall, Cisco’s revenue declined slightly on a year-on-year basis for the quarter ended January 23. Sales declined for the fifth quarter in a row. The weaker economy has dampened the company’s growth prospects, as has some customers’ decision to use cloud services to keep employees working efficiently and staying away during the coronavirus pandemic.
In the company’s leading product segment, Infrastructure Platforms, which includes sales of switches and routers for data center networks, Cisco had sales of $ 6.39 billion, down 3% year over year and above consensus polled by FactSet of $ 6.23 billion.
“The corporate market continues to be weak due to some extended sales cycles and prolonged hiatus in spending by some customers that was triggered by the pandemic,” Cisco CEO Chuck Robbinwebes told analysts on a conference call.
The applications division, including Webex video calling products, had sales of $ 1.35 billion, unchanged year on year, just below the FactSet consensus estimate of $ 1.40 billion. Webex now has 600 million “quarterly average users,” said Robbins.
During the quarter, Cisco increased its bid to purchase network hardware company Acacia Communications from $ 2.6 billion to $ 4.5 billion. The company also announced that it plans to acquire cloud communications software maker IMImobile for $ 730 million and is rolling out third-party tool integration for Webex.
In relation to the forecasts, Cisco expects adjusted earnings per share of 80 to 82 cents with revenue growth of 3.5 to 5% in the third fiscal quarter. Analysts polled by Refinitiv had expected adjusted earnings per share of 81 cents and sales of $ 12.35 billion, which would correspond to sales growth of 3%.
Excluding the after-hours move, Cisco stocks are up 9% year-to-date, while the S&P 500 index is up 4%.
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