What slowdown? Fresh off earnings beat, Cisco CEO sees a lot of opportunity right now

Published Wed, Nov 16 20229:05 PM ESTUpdated Thu, Nov 17 202211:57 AM EST

Cisco (CSCO) CEO Chuck Robbins said Wednesday that he expects customers will keep spending to keep their technology infrastructure up to snuff — a sentiment at odds with some on the Street who predict a slowdown. "The [Covid] pandemic taught our customers a very important lesson about being prepared with your technology infrastructure. And I think that they're going to continue to spend as much as they can," Robbins told Jim Cramer in an interview. That spending and a massive backlog — orders that have yet to be filled — led Cisco to raise its guidance on Wednesday after the company reported a quarterly beat on the top and bottom lines. Shares of Cisco rose about 4% in extended trading Robbins emphasized that the trajectory of tech development also plays in favor of Cisco's top line. "When you think about all the secular trends with 5G and hybrid work and hybrid cloud and these build out of these AI workloads and full stack observability, all of these things are tailwinds to our business," he said, adding that he sees acceleration in the company's internet of things business. Robbins also said that the company made good progress on working through its backlog, but emphasized that its standout performance this quarter wasn't boosted by aged demand. "Assuming our bookings for the year are even down 10% – which is not what we're forecasting – we would project we'll exit the fiscal year with two to three times our normal year-ending backlog," he said, adding that the company's backlog typically amounts to around $4 to $5 billion dollars. "And then you look at 43% of our business coming from recurring [customers]," Robbins said. "We have more visibility than we traditionally have had, and we have a high degree of confidence in the results that we're going to be able to deliver." As for macroeconomic headwinds that have battered tech names as of late, leading them to lay off thousands of employees, the chief executive hinted that the company's reprioritization of slashing costs will be a tailwind for Cisco. He stated that the company has the technology necessary to help companies lower their energy consumption to shield themselves from higher prices spurred by the energy crisis in Europe. "There's a lot of opportunity right now," he said. "We're not naive. We understand what's happening in the world. But we feel good." (Jim Cramer's Charitable Trust is long CSCO. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE