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Cisco current-quarter outlook disappoints

Cisco Systems reported quarterly earnings and revenue that topped Wall Street's expectations on Wednesday.

During the current quarter, it expects revenue to rise 4 to 7 percent, compared to a 8 percent expected rise.

It reported earnings ex items of 54 cents a share, compared to 53 cents a share in the year-earlier period.

Cisco CEO John Chambers speaks during the 2011 International Consumer Electronics Show (CES) in Las Vegas.
Jacob Kepler | Bloomberg | Getty Images
Cisco CEO John Chambers speaks during the 2011 International Consumer Electronics Show (CES) in Las Vegas.

Revenue increased 1 percent to $12.25 billion from $12.09 billion a year ago.

Shares rose more than 2 percent in after-hours trade on the news before turning negative.

"This was our strongest Q1 ever in terms of revenue, non-GAAP operating income, and non-GAAP EPS," wrote Chairman and CEO John Chambers in a release. "We continue to make progress towards becoming the 1 IT company in the world. We are still in a tough environment, but seeing encouraging trends as cities, businesses, governments and schools are becoming more digitized."

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Analysts polled by Wall Street had expected fiscal first-quarter earnings of 52 cents a share on revenue of $12.16 billion, according to a consensus estimate from Thomson Reuters.

Executive vice president and CFO Frank Calderoni recently told the company he will step down, effective January 1, 2015, a release said. The information technology company said it plans to appoint in his place its current senior vice president of business technology and operations finance, Kelly A. Kramer.

Daniel Ives of FBR Capital Markets said the change in the CFO is something the Wall Street would welcome and said he saw more acquisitions coming.

"Compare these results relative to IBM and Oracle, Cisco is moving in the right direction," Ives told CNBC's "Closing Bell." CEO "Chambers continues to be a magician in the balance between growth and profitability. I think you have to give him credit."

Despite dollar pressures that have caused concerns in emerging markets, especially China, CNBC and The Street contributor Stephanie Link expects the stock to rally because of a strong gross margin number.

"The company has done a pretty good job at cutting costs and really focusing on streamlining and buying back more stock," she told CNBC's "Closing Bell."

Founded in 1984, Cisco Systems produces routers and other information technology hardware, as well as offers cloud computing and conferencing services.

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During its last quarterly report, the company announced it would cut 8 percent of its workforce, or 6,000 jobs in a restructuring plan.

Reuters contributed to this report.