Cisco Rises as Sales Beat Expectations
Shares of networking giant Cisco Systems rose by nearly seven percent in after-hours trading as the company reported results that were better than had been expected.
Cisco reported third quarter sales of $11.6 billion and per share and profit of 51 cents. The results compared with a consensus view of analysts that had called for $11.4 billion in revenue and a 48-cent profit.
“Our financial results exceeded the guidance we provided last quarter as we demonstrated clear progress on returning to growth,” Cisco CEO John Chambers said in a statement. He had told analysts to expect a decline in sales last quarter, and indeed that is what Cisco delivered, but it wasn’t as bad as suggested.
Cisco’s sales fell only 5.5 percent, slightly better than the six to eight percent drop he projected in February.
A conference call with analysts is set to get under way shortly, when the company will issue guidance for the quarter ending in July.
Cisco shares rose to $23.80 after closing at $22.81 during the regular session.
Update: On a conference call, CFO Frank Calderoni said Cisco expects sales to decline between one percent and three percent in the July quarter. Gross margins will come in between 61 percent and 62 percent he said.
Earlier on the call, Chambers said Cisco expects “several more quarters” before growth occurs in switching, its biggest market segment. In that business, which accounted for 29 percent revenue, sales fell six percent year on year to $3.4 billion. “We think it will take at least two quarters for switching to start growing again,” he said.
Several other segments saw declines. Routing fell 10 percent. Service provider video fell 26 percent to $961 million. Collaboration fell 12 percent.
Other segments saw growth, but they were too small to make much of a difference to the overall results. The data center business grew by 29 percent, but at $662 million it was less than six percent of sales. Security grew 10 percent, but its revenue was even smaller.
Geographically, Cisco saw its biggest declines in the Americas, which fell about six percent. Europe was more or less flat. Asia fell nearly nine percent.