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Cisco Beats Earnings, Shares Up

Published 02/16/2017, 01:43 PM
Updated 03/09/2019, 08:30 AM

Shares of Cisco Systems (NASDAQ:CSCO), an American multinational tech company jumped by almost 2% after it beat earnings expectations for its fiscal third-second earnings report, but delivered slightly lower earnings guidance for the coming quarter.

Higher EPS

From consensus analyst estimates of $11.55 billion in sales and adjusted earnings of 56 cents per share, the networking giant reported profits of $2.3 billion for the fiscal second-quarter with earnings of 57 cents per share and $11.58 billion in sales. Cisco’s revenue declined by 2% compared to last year’s same quarter at $11.93 billion to the most recent report of $11.58 in revenue.

Although Cisco’s overall revenue rose, its revenue for its Switching business tumbled by 5% compared to the same quarter last year to $3.30 billion narrowly missing analysts’ expectations of $3.39 billion.

Along with the release of their earnings report, Cisco also announced that they would boost their quarterly dividend from 26 cents to 29 cents.

Cisco chief financial officer Kelly Kramer stated that the company expects the performance to go on and that they expect the value to be returned to their shareholders. In the statement, she emphasized that the company is pleased with the business transition to software and their recurring revenue progress.

The positive earnings report also impressed investors as the company cut more than 5,000 jobs August last year, which was around 7% of its workforce globally as a part of a restructuring program for Cisco which was a shift to focus the business more on cloud services, security, and internet services.

"We are pleased with the quarter and the continued customer momentum as we help them drive security, automation, and intelligence across the network and into the cloud," said Chuck Robbins, chief executive of Cisco.

Cisco Shares

Although shares of the company rose by 1.58% following the release of the earnings report at $32.82, Cisco shares fell back by 1% to $32.50 during after-hours trading on a weaker earnings outlook for the fiscal third quarter at around 57 to 59 cents per share still in line with some analysts estimates at 58 cents EPS.

As the stock declined during after-hours trading, analysts became concerned with whether how the company is keeping up with its transitioning and the performance of their computer hardware business which was originally their main source of revenue.

For the coming quarter, Cisco expects its revenue to be down at around 2% compared to last year and its GAAP earnings to range around 44 to 49 cents while its non-GAAP gross margin to range at around 64% to 64%.

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