Cisco Gives Solid Outlook, Though Profit Edges Lower
May 18 2016 - 5:10PM
Dow Jones News
Cisco Systems Inc. posted a 3.6% decrease in profit for its
latest quarter, but the network-equipment maker's adjusted profit
came in better than analysts expected and it gave a rosy outlook
for the fourth quarter.
Shares of the Cisco rose 5.4% to $28.16 in after-hours trading.
As of Wednesday's close, they had fallen 5.2% in the past
month.
The San Jose, Calif., company, whose results are watched as an
indicator of demand for corporate technology, has shown strength
lately, and the company in February boosted its dividend and
stock-buyout plans as it projected stronger-than-expected adjusted
revenue for the third quarter.
On Wednesday, Cisco said adjusted revenue grew 3%, compared with
company expectations of 1% to 4% growth, though the top line did
decline 1.1% overall when including the video business that Cisco
separated in November.
For the fourth quarter, Cisco projected adjusted revenue would
be flat to up 3% and adjusted per-share earnings would be 59 cents
to 61 cents, compared with analysts' expectations for adjusted
earnings of 58 cents a share, according to Thomson Reuters.
Still, there have been signs that weakening economic conditions
have taken a toll on the businesses the company serves, as revenue
from switching gear—its largest single business—has declined. In
the latest quarter, switching revenue fell 3%, while revenue in the
company's routing business fell 5%. Revenue from collaboration, the
company's third-biggest revenue stream, climbed 10%.
Over all for the quarter ended April 30, Cisco reported earnings
of $2.35 billion, or 46 cents a share, down from $2.44 billion, or
47 cents a share. Excluding items such as stock-based compensation,
the company's per-share earnings rose to 57 cents from 54 cents a
year earlier. Analysts had expected 55 cents.
Cisco, because of its position in the network-equipment market,
frequently experiences shifts in business conditions ahead of some
of its peers.
Write to Nathan Becker at nathan.becker@wsj.com
(END) Dow Jones Newswires
May 18, 2016 16:55 ET (20:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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