Cisco CEO Chuck Robbins participates in a Bloomberg interview on the World Economic Forum in Davos, Switzerland, on January 17, 2024.
Stefan Wermuth | Bloomberg | Getty Images
Cisco reported fiscal third-quarter earnings and revenue that beat Wall Street estimates, although sales fell from a 12 months earlier. The shares even rose by 8% in prolonged trading.
Here’s how the corporate performed in comparison with the LSEG consensus:
- Earnings per share: 88 cents adjusted versus 82 cents expected
- Revenue: $12.7 billion versus expected $12.53 billion
According to an announcement, Cisco’s revenue fell about 13% year-over-year within the quarter ended April 27. That’s the largest decline since 2009. Net income fell 41% to $1.89 billion, or 46 cents per share, compared with $3.21 billion, or 78 cents per share, a 12 months earlier.
The weakening performance was as a consequence of customers restoring equipment that they had received in recent quarters, the statement said. Cisco made similar comments in its last earnings report three months ago.
“We currently expect customers to complete the installation of the majority of their inventory by the end of our fiscal year in July,” Cisco CEO Chuck Robbins said in a conference call with analysts.
Cisco’s public sector business was weaker within the U.S. than in other regions.
“We believe this has now been resolved with the subsequent signing of the most recent funding from the federal government,” Robbins said.
Network revenue fell 27% to $6.52 billion. The category, which incorporates data center switches, continues to account for a majority of total sales.
During the quarter Cisco accomplished the $28 billion acquisition of security software maker Splunk. The deal reduced Cisco’s adjusted earnings per share by a cent but added $413 million in additional revenue.
“After closing, we have identified 5,000 existing Cisco customers who have the potential to become significant Splunk customers, and our sales teams are already making these contacts,” Robbins said. Cisco will have the opportunity to cut back costs over time, said Chief Financial Officer Scott Herren.
Cisco raised its fiscal 2024 revenue forecast to $53.6 billion to $53.8 billion from $51.5 billion to $52.5 billion in February. Analysts surveyed by LSEG had expected $53.14 billion.
The company reduced its adjusted full-year profit forecast. The price is now $3.69 to $3.71, in comparison with $3.68 to $3.74 in February. The LSEG consensus was $3.67.
Before Wednesday’s announcement, stocks were down 2% in 2024, while the S&P 500 index was up 11%.
Cisco said Gary Steele, previously CEO of Splunk, will probably be named president of go-to-market for the parent company, effective immediately. Jeff Sharritts, Cisco’s chief customer and partner officer, is leaving.
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WATCH: Cisco CEO Chuck Robbins: $28 billion Splunk deal will probably be a major financial growth driver
