In this image, released on May 2, 2021, from left, Cisco CEO Chuck Robbins and Bea Perez, Chief Public Affairs, Communications and Sustainability Officer of the Coca-Cola Company, speak during Global Citizen VAX LIVE: The World Reunification Concert at SoFi Stadium on stage in Inglewood, California.
Kevin Winter | Getty Images
Cisco stock fell 6% in expanded trading on Wednesday after the maker of data center network hardware expected earnings for the quarter to be lower than analysts had anticipated. The company announced the news in its earnings report for the quarter ended May 1, the third quarter of its fiscal year.
This is how the company did it:
- Merits: 83 cents per share, adjusted compared to 82 cents per share, as analysts expected, according to Refinitiv.
- Revenue: According to Refinitiv, $ 12.80 billion versus $ 12.56 billion as analysts expected.
Cisco reversed a five-quarter decline in revenue and grew nearly 7% year over year, despite the quarter spanning 14 weeks instead of 13 weeks in the year-ago period.
In terms of its guidance, Cisco sees adjusted earnings per share of 81 to 83 cents and revenue growth of 6 to 8% for the fourth quarter of its fiscal year. Analysts had expected adjusted earnings per share of 85 cents and sales of 12.82 billion US dollars, which corresponds to a growth of 5.5%.
In the third quarter of fiscal year, Cisco’s top segment, Infrastructure Platforms, which includes sales of network switch hardware, returned $ 6.83 billion, up 6% and more than the FactSet consensus estimate of 6 . $ 77 billion.
The applications segment, which includes Webex video call products, contributed $ 1.43 billion to revenue, up 5 percent and just below the FactSet consensus of $ 1.44 billion.
Cisco has worked with automakers and other companies to overcome supply chain challenges.
“The good news, and this is reflected in our guidelines, is that we are confident that we will work this through as we have already made revised agreements with several of our key suppliers,” said Chuck Robbins, Cisco CEO, in a conference call with analysts . “We believe these measures will allow us to optimize our access to critical components, including semiconductors, and serve our customers by meeting their needs as quickly as possible.”
Delivery terms impacted adjusted gross margin for the fourth quarter of fiscal as Cisco continues to incur costs – including higher freight and unit costs for chips and memory – to ensure products are shipped to customers, said Scott Herren, chief financial officer of the Company.
“I think the supply chain problems will stay with us at least until the end of this calendar year,” said Herren.
Without the current supply momentum, sales projections would have been higher, Robbins said.
“You can use the growth rate we saw on the product page and then use the appropriate guide to extrapolate that our backlog is certainly growing. So if we had the shipping capacity we would but we just don’t have it,” said Robbins said.
During the quarter, Cisco completed the acquisition of network hardware maker Acacia Communications for $ 4.5 billion and the acquisition of cloud communications software company IMImobile for $ 730 million. Cisco is also committed to delivering the majority of its portfolio as a service.
Excluding the move after Wednesday’s business hours, Cisco stocks are up roughly 17% year-to-date, compared to a 9% increase in the S&P 500 index over the same period.
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