Cisco Systems Inc. reported stronger-than-expected sales and profit in its latest quarter, but the Silicon Valley giant's guidance disappointed Wall Street.

The networking equipment maker said profit rose 33% in its fiscal first quarter while revenue rose 3.6%. Cisco's adjusted profit topped its own expectations and Wall Street's.

But shares fell 2% after hours as the company forecast a weaker current quarter than analysts expected. It projected revenue growth, of flat to up 2%, below estimates of 5% growth, with adjusted earnings of 53 cents to 55 cents a share, below forecasts of 56 cents.

"Our guidance reflects lower-than-expected order growth in [the first quarter], driven largely by the uncertainty of the macro environment and currency impacts," said Chief Executive Chuck Robbins, in prepared remarks.

Cisco, whose hardware helps connect computers to each other and the Internet, frequently experiences shifts in business conditions ahead of some of its peers. Its revenue started growing in the first fiscal quarter of last year after several lackluster quarters.

Mr. Robbins assumed his position in July from John Chambers, who led the company for 20 years and remains chairman. The new CEO has pushed some changes in tactics, including discontinuing some businesses and expressing a preference for strategic alliances with large companies rather than risky acquisitions.

One example came Monday, when Cisco announced a far-reaching deal with Ericsson AB. The pact is designed to combine Cisco's strength in Internet technology with the Swedish company's expertise in equipment used by wireless operators. The companies agreed to collaborate in areas that include making existing products work better together, while Ericsson will resell Cisco gear.

In the short-term, Wall Street still closely scrutinize Cisco's momentum in its two biggest businesses—switching and routing—which rebounded in recent quarters after new models hit the market. The company said Thursday that switching revenue grew 5% in the period, while router sales declined 8%; those businesses, respectively, grew 2% and 3% in the quarter ended in July.

Cisco is experiencing faster growth in newer kinds of products, including conferencing hardware and software. That collaboration business—Cisco's third-largest—saw revenue grow 17% in the first quarter.

Revenue from the company's data center business, which includes sales of server systems, jumped 24%.

In all, Cisco reported net income for the period ended Oct. 24 of $2.43 billion, or 48 per share, compared with profit in the year-earlier period of $1.83 billion, or 35 cents a share. Revenue rose to $12.68 billion from $12.25 billion.

On an adjusted basis that excludes share-based compensation and other items, Cisco put net income at 59 cents. Analysts on that basis had expected earnings of 56 cents a share on revenue of $12.65 billion, according to Thomson Reuters.

Write to Don Clark at don.clark@wsj.com

 

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(END) Dow Jones Newswires

November 12, 2015 17:05 ET (22:05 GMT)

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