Cisco CEO Chuck Robbins
Manuel Blondeau | AOP.Press | Corbis | Getty Images
Cisco shares tumbled as much as 8% in extended trading on Wednesday after the computer networking company reported quarterly revenue that fell short of analysts’ expectations and issued weaker-than-expected guidance.
Here’s how the company did in its fiscal first quarter:
Earnings: 82 cents per share, adjusted, vs. 80 cents per share as expected by analysts, according to Refinitiv.Revenue: $12.90 billion, vs. $12.98 billion as expected by analysts, according to Refinitiv.
Cisco said per-share earnings in the fiscal second quarter will be between 80 cents and 82 cents, excluding some items, on 4.5% to 6.5% annualized revenue growth. Analysts polled by Refinitiv had expected 82 cents per share in adjusted earnings on $12.85 billion in revenue, which implies 7.4% growth.
For the full fiscal year, Cisco’s forecast was $3.38 to $3.45 in adjusted earnings per share and 5% to 7% revenue growth. Analysts polled by Refinitiv were looking for earnings of $3.42 per share and $52.87 billion in revenue, which would equal 6.1% growth.
Revenue rose 8% in the first quarter from a year earlier, the company said in a statement. Net income, at $3 billion, grew 37%.
The company faced supply constraints, CEO Chuck Robbins said on a conference call with analysts.
“We’ve been taking multiple steps to mitigate the supply shortages and deliver products to our customers, including working closely with our key suppliers and contract manufacturers, paying significantly higher logistics costs to get the components where they are most needed, working on modifying our designs to utilize alternative suppliers where possible and constantly optimizing our build and delivery plans,” Robbins said.
That work and cost increases from suppliers are together pressuring Cisco’s gross margin, Robbins said.
“While we thoughtfully raise prices to offset this impact, the benefits are not immediate and will be recognized over the coming quarters,” he said. Meanwhile, customers are frustrated with lead times for receiving products, Robbins said.
Cisco announced new product categories for reporting revenue during the period and is now highlighting some smaller parts of the business, such as Optimized Application Experiences. The largest category under the new structure, Secure, Agile Networks, which includes data center networking switches, produced $5.97 billion in revenue, up 10%.
The Internet for the Future category, comprising routed optical networking, public 5G, silicon and optics products, generated $1.37 billion in revenue, up 46%. And revenue in the Hybrid Work category, including Webex collaboration products, fell 7% to $1.11 billion.
During the quarter Cisco showed a preview of Webex Hologram, a new way to hold meetings in augmented reality with holograms of meeting participants.
Excluding the after-hours move, Cisco shares are up about 28% this year, while the S&P 500 index is up 25% over the same period.
This is breaking news. Please check back for updates.