CSCO Cisco Systems Inc

By Jay Greene 

Cisco Systems Inc. on Wednesday reported its third-consecutive quarter of revenue growth, evidence the networking-gear maker's move to build up its software business is paying off.

Shares of Cisco jumped 6.3% in after-hours trading after finishing the regular day at $43.86.

Cisco's streak -- the company generated $12.84 billion in total revenue in its fiscal fourth quarter, up 6% from a year earlier -- comes after two years of declines during which it faced increasing pressure from competitors while it relied heavily on slower-growth hardware sales.

And the company expects the run to continue, providing guidance that calls for revenue growth of between 5% and 7% in the current quarter.

Cisco has seen its financial fortunes improve, as it focused on software sales, particularly in the security arena. Revenue in its security segment revenue jumped 12% to $627 million.

Net income surged 57% to $3.8 billion, or 81 cents a share. Adjusted earnings came to 70 cents a share, beating analysts' expectations by a penny, according to a survey by S&P Global Market Intelligence. Analysts had expected revenue of $12.76 billion.

"I'm pragmatic enough to know that it's a combination of both" the company's performance and the macroeconomic environment, Cisco Chief Executive Chuck Robbins told analysts.

One area of concern for Mr. Robbins is the growing trade dispute between the U.S. and China. Last month, the White House said it was considering expanding the trade fight with China by assessing tariffs on $200 billion in Chinese goods, in addition to duties levied and proposed on $50 billion of Chinese imports earlier this summer.

The proposed tariffs target, among other items, switches and routers -- some of which Cisco makes in China and imports to the U.S.

"We're in deep discussions in Washington with the administration on trying to get to a favorable outcome," Mr. Robbins told analysts. He didn't detail the potential impact the proposed tariffs might have on the company's results.

In Cisco's largest segment, infrastructure platforms, revenue grew 7% to $7.44 billion, while revenue in its applications business climbed 10% to $1.34 billion.

Cisco said it returned $7.5 billion to shareholders in its fiscal fourth quarter. Its total cash is at $46.5 billion, 34% lower than it was a year ago. The increasing shareholder returns come after Cisco repatriated $67 billion of its foreign cash holdings earlier this year, the result of the new U.S. tax law. Six months ago, the company said it would spend about $44 billion on share buybacks and dividends over two years.

"I don't think anyone believes we need the level of cash we have now," Mr. Robbins said in an interview.

Write to Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

August 15, 2018 20:07 ET (00:07 GMT)

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