Chuck Robbins, CEO of Cisco Technologies Inc., speaks during a panel session at the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, January 17, 2017. World leaders, influential executives, bankers and legislators participate at 47th annual meeting of the World Economic Forum in Davos, 17-20 January.
Jason Alden | Bloomberg | Getty Images
Cisco shares fell 4% in the extended trading session on Tuesday after the company reported second-quarter fiscal profits that showed lasting difficulties in its main product segment. Still, the company’s results and quarterly guidance exceeded analysts’ estimates.
See how the company did:
- Earnings: 79 cents per share, adjusted, against 76 cents per share as expected by analysts, according to Refinitiv.
- Recipe: US $ 11.96 billion, against US $ 11.92 billion expected by analysts, according to Refinitiv.
Overall, Cisco’s revenue declined slightly on an annualized basis for the quarter, which ended on January 23, according to a statement. Revenue declined for the fifth consecutive quarter. The weaker economy has hindered the company’s growth prospects, as well as some customers’ decisions to leverage cloud services to keep employees working efficiently while remaining remote during the coronavirus pandemic.
In the company’s main product segment, Infrastructure Platforms, which includes sales of data center network switches and routers, Cisco generated $ 6.39 billion in revenue, down 3% year-over-year and exceeding the US consensus. $ 6.23 billion among analysts surveyed by FactSet.
“The business market remains weak, driven by some prolonged sales cycles and a continuing pause in spending by some customers caused by the pandemic,” Cisco CEO Chuck Robbins told analysts on a conference call. While switch revenue was flat, router and server revenue dropped.
The Applications unit, including Webex video call products, generated $ 1.35 billion in revenue, stable year on year and slightly below FactSet’s consensus estimate of $ 1.40 billion. Webex now has 600 million “quarterly average users,” said Robbins.
In the quarter, Cisco increased its offer to buy network hardware company Acacia Communications from $ 2.6 billion to $ 4.5 billion. The company also announced that it planned to acquire the cloud communication software maker IMImobile for $ 730 million, and introduced third-party tool integrations for Webex.
Regarding the guidance, Cisco said it expects 80 cents to 82 cents of adjusted earnings per share in revenue growth of 3.5% to 5% in the third fiscal quarter. Analysts polled by Refinitiv had expected 81 cents of adjusted earnings per share and $ 12.35 billion in revenue, which would result in a 3% revenue growth. The quarter includes an extra week.
Excluding the change after hours, Cisco shares have risen about 9% since the beginning of the year, while the S&P 500 index rose 4%.
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TO SEE: Cisco CEO Chuck Robbins reflects on how to lead in tough times