Cisco Shares Skid as Outlook Disappoints
Cisco Systemsshares skidded after the company's outlook fell short of expectations.
The networking-gear maker said it expects fiscal fourth-quarter earnings of between 44 and 46 cents a share and revenue growth of 2.5 percent; analysts currently expect earnings of 49 cents a share on revenue growth of 7 percent, according to Thomson Reuters.
After the guidance, shares were down more than 8 percent in trading after the closing bell. (Click here to get the latest quotes for Cisco.)
“What I’m hearing from the CEOs is they plan to spend more in the second half of the year and then in the very next sentence, they say it depends on what we see out of Europe and the global economy. It depends on what government activity we see — whether we are in India, or in the U.S. or in Argentina,” Cisco CEO John Chambers said.
The company posted fiscal third-quarter earnings excluding items of 48 cents per share, up from 42 cents a share in the year-earlier period.
Net income was $2.2 billion, or 40 cents per share up from $1.8 billion, or 33 cents per share, at the same time last year.
Revenue climbed 7 percent to $11.6 billion from $10.87 billion a year ago.
Analysts had expected the company to report earnings excluding items of 47 cents a share on $11.58 billion in revenue, according to an estimate from Thomson Reuters.
The report allayed some concerns about global technology spending even as questions remained about the company's ability to weather economic weakness.
"It's not too shabby, considering the choppy environment we are in," Mark Sue, analyst at RBC Capital Market said.
"Still, the global macro storm clouds are gathering and it remains to be seen if Cisco can use its newfound execution prowess to navigate this difficult environment," he added.
Analysts had expected a solid quarter driven by U.S. enterprise and commercial demand as well as gains in the router and switches markets with weakness in the public sector and Europe.