Chuck Robbins, CEO of Cisco Technologies Inc., speaks at a panel meeting at the World Economic Forum (WEF) in Davos, Switzerland on Tuesday, January 17, 2017. World leaders, influential executives, bankers and policymakers are attending the 47th annual meeting of the World Economic Forum in Davos from 17 to 20 January.
Jason Alden | Bloomberg | Getty Images
Cisco shares fell 4% on Tuesday in extended trading after the company posted fiscal earnings in the second quarter, showing continued struggle in its top product segment. Yet the company’s results and quarterly projections exceeded analysts’ estimates.
Here’s how the company fared:
- Earnings: 79 cents per share, adjusted to 76 cents per share as expected by analysts, according to Refinitiv.
- Income: $ 11.96 billion, compared to $ 11.92 billion, as expected by analysts, according to Refinitiv.
Overall, Cisco’s revenue declined slightly year-on-year in the quarter, ending January 23, according to a statement. Revenue declined for the fifth consecutive quarter. The weaker economy has dampened the company’s growth prospects, as well as the decision of some customers to use cloud services to keep employees working efficiently while staying away during the coronavirus pandemic.
In the company’s leading product segment, Infrastructure Platforms, which includes sales of data center switches and routers, Cisco generated $ 6.39 billion in revenue, down 3% year-over-year and above the consensus of $ 6.23 billion among analysts surveyed by FactSet.
“The enterprise market remains soft, driven by some lengthy sales cycles and a continuing disruption in the spending of some customers that is being continued by the pandemic,” Cisco CEO Chuck Robbins said during a conference call to analysts. While liaison revenue was low, routers and servers’ revenue declined.
The Applications Unit, including Webex video calling products, generated $ 1.35 billion in revenue year after year, just below the $ 1.40 billion FactSet consensus estimate. Webex now has 600 million “average quarterly users,” Robbins said.
During the quarter, Cisco increased its offer to buy hardware company Acacia Communications from $ 2.6 billion to $ 4.5 billion. The company also announced plans to acquire IMImobile for $ 730 million for the cloud communications software, and it has introduced integrations of third-party tools for Webex.
As for leadership, Cisco said it expects 80 cents to 82 cents in adjusted earnings per share with 3.5% to 5% growth in fiscal third quarter. Analysts surveyed by Refinitiv expected 81 cents in adjusted earnings per share and $ 12.35 billion in revenue, which would result in 3% revenue.
Excluding the after-hours move, Cisco shares have risen about 9% since the beginning of the year, while the S&P 500 index has risen 4%.
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LOOK: Cisco CEO Chuck Robbins reflects on complicated times