Cisco’s Quarterly Performance: A Mixed Bag
Revenue Decline Amidst Bright Spots
Cisco Systems, a leading networking equipment manufacturer, has reported its fourth consecutive quarter of declining revenue, despite beating analysts’ estimates. The company’s stock slipped by around 1% in extended trading.
Financial Highlights
Cisco’s revenue dropped 6% in the quarter ended October 26, from $14.7 billion a year earlier, to $13.9 billion. Net income fell to $2.71 billion, or 68 cents per share, from $3.64 billion, or 89 cents per share, in the same quarter a year ago.
Segment Performance
The company’s networking revenue took a significant hit, plunging 23% to $6.75 billion, slightly below the $6.8 billion consensus estimate. On the other hand, security revenue more than doubled to $2.02 billion, topping the StreetAccount consensus of $1.93 billion. Collaboration revenue came in at $1.09 billion, a bit below the $1.04 billion consensus estimate.
AI Infrastructure Orders Surge
Cisco’s CEO, Chuck Robbins, highlighted the company’s success in securing orders for artificial intelligence (AI) infrastructure from large-scale clients, exceeding $300 million in the quarter. This trend is expected to continue, with Robbins confident of reaching the target of $1 billion of AI orders this fiscal year from web-scale customers.
Acquisitions and Guidance
During the quarter, Cisco acquired security startups DeepFactor and Robust Intelligence. The company also lifted its full-year guidance to $3.60 to $3.66 in adjusted earnings per share on $55.3 billion to $56.3 billion in revenue, up from a prior forecast. This indicates projected revenue growth of 3.3% at the middle of the range.
Year-to-Date Performance
As of Wednesday’s close, Cisco’s stock was up 17% year to date, while the S&P 500 index is up around 26% over that stretch. Despite the revenue decline, Cisco’s performance remains strong, driven by its focus on emerging technologies like AI and security.
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