Cisco Profit, Sales Top Forecasts; Shares Up
Cisco Systems reported earnings and sales that edged analysts' expectations and affirmed its long-term growth forecast, saying it expects the weak economic environment to be relatively short term.
Cisco shares rose nearly 4 percent as investors took heart from Chief Executive John Chambers' comment that he had "very strong" confidence in Cisco's long-term revenue growth target of 12 percent to 17 percent.
They closed 3 percent higher in the regular session at $22.65.
"It was a solid clean result," said Mark McKechnie, an analyst at American Technology Research.
The world's biggest maker of computer networking gear reported earnings of 40 cents a share in its fiscal fourth quarter, excluding one-time items. Sales reached $10.36 billion.
In the comparable period last year, Cisco brought in a profit of 36 cents a share on a topline of $9.433 billion.
Analysts expected slightly less. A consensus estimate compiled by Thomson Reuters put Cisco's earnings at 39 cents a share and its sales at $10.310 billion.(See the accompanying video for more from Cisco Chief Executive John Chambers.)
Chambers saw mixed signals in the economy, stock market and energy costs. But he said this was a "relatively short term challenge" and his best estimate was the current environment would last a few more quarters.
While Chambers avoided giving a full-year outlook for the fiscal year that just began, he forecast revenue growth of 8 percent in the first quarter and 8.5 percent in the second quarter.
"Cisco will always be affected by economic changes," Chambers said on a conference call. "During each economic slowdown, Cisco has always navigated through them very effectively gained wallet share and in my opinion market share."
The company said Tuesday that emerging market orders grew around 10 percent in the July quarter, whereas orders in the United States and Canada grew 7 percent. European orders grew 11 percent.
Cisco shares are still down more than 20 percent from a year earlier amid worries a slower U.S. economy could drag down spending on network equipment.
Cisco said its profit for the fiscal fourth quarter including one-time charges and other items rose to $2.0 billion, or 33 cents a share, from $1.9 billion, or 31 cents a share, in the year-ago quarter.
- Wire services contributed to this report.