Cisco shares drop after earnings report as revenue continues to decline

Earnings

Cisco reported fiscal second-quarter results that beat analysts’ estimates on Wednesday, but investors were not impressed with the company’s continuing revenue declines, and the stock is now trading down around 4% after hours.

Here are the key numbers:

  • Earnings: 77 cents per share, excluding certain items, vs. 76 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $12.01 billion, vs. $11.98 billion as expected by analysts, according to Refinitiv. That’s down 4% from last year.

Cisco remains the dominant player in the data center switch market, but the company has for years been mired in slow growth because the bulk of new spending in IT is going to the large cloud vendors rather than the legacy hardware manufacturers.

The company said it expects 79 cents to 81 cents in earnings per share, excluding certain items, and an annualized revenue decline of 1.5% to 3.5% in the fiscal third quarter. The EPS estimates were ahead of expectations, but the company noted on its call that the forecast did not take into account any disruptions to the supply chain that might arise from the coronavirus crisis in China. 

Revenue for Cisco’s two largest business segments, Infrastructure Platforms and Applications, were both down 8% year over year, coming in at $6.5 billion and $1.3 billion, respectively.

Cisco’s stock has gained just 5% in the past year, trailing the nearly 22% gain for the S&P 500 and even further behind the performance of Amazon, Microsoft and Alphabet.

CEO Chuck Robbins told CNBC in November that large customers are pausing spending plans because of global economic uncertainties related to Brexit and the U.S.-China trade deal. In Davos last month, at the World Economic Forum, Robbins said in an interview that while the domestic economy is strong, “we’ve also seen other indicators that outside the U.S. it’s a little more sluggish.”

WATCH: CNBC’S interview with Cisco CEO Chuck Robbins

Products You May Like

Articles You May Like

The $1 billion Mega Millions jackpot has a winner. Here are tips for handling the windfall
‘Unintended consequences’ from massive stimulus worry long-time bull Jim Paulsen
While the U.S. may be closer than ever to a $15 federal minimum wage, the idea still faces stiff opposition
When can unemployed workers refuse a job offer? Biden wants to clear that up
Belk’s top lenders, including KKR, looking to avoid taking department store through bankruptcy, WSJ says

Leave a Reply

Your email address will not be published. Required fields are marked *