Cisco Systems (CSCO) reported adjusted earnings and revenues for its second fiscal quarter of 2021 that exceeded analysts’ estimates. Cisco shares fell on the extended trading session on Tuesday, as the company’s profit orientation for the current April quarter hit expectations.
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In the quarter ended January 23, Cisco’s profit increased by 2% to 79 cents a share from the previous year, the company said. Revenue stood at US $ 12 billion, almost stable compared to the previous year.
With corporate spending on network infrastructure declining amid a shift to remote work during the coronavirus emergency, analysts say the big question is whether Cisco can gain traction in cloud computing data centers. In that market, Arista Networks (ANET) is Cisco’s main rival.
A year earlier, Cisco’s profit was 77 cents a share on sales of $ 12.01 billion. Analysts had expected Cisco’s earnings of 76 cents on sales of $ 11.92 billion.
Cisco shares fell 3.3% to 46.88 in extended trades on the stock market today.
Cisco’s earnings guidance meets expectations
For the current April quarter, Cisco’s earnings are expected to be 81 cents at the midpoint of its projection, in line with estimates. Cisco expects revenue to grow 4.5%. Analysts projected that revenue would increase by about 3% to $ 12.36 billion.
However, Cisco’s third quarter of 2021 will have 14 weeks, compared with 13 weeks for the same quarter in fiscal 2020. In a statement, Cisco said this is “reflected in the guidance”.
In the January quarter, Cisco repurchased $ 801 million of its own shares. Cisco has $ 9.2 billion remaining in a share buyback program.
From a technical point of view, Cisco stock formed an identifier with an entry point of 46.56. Cisco’s shares fell behind the S&P 500 in 2020. However, Cisco’s shares retreated from a low of 35.28 on October 29 amid a market rotation for value stocks.
Cisco shares had a Relative Strength Rating of only 37 out of 99 possible in Cisco’s earnings report, according to the IBD Stock Checkup.
The company abandoned its core business of selling network switches and routers. With the acquisitions, Cisco aims to increase revenue from software and services.
Cisco shares that pay dividends remain one of the top technology companies in the United States in terms of cash on their balance sheet. However, Cisco’s share buybacks have slowed.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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