Cisco Systems Inc reported fiscal third-quarter results, surpassing Wall Street estimates despite a significant decline in revenue. The company attributed this decline to weak sales from consumers who were installing previously purchased equipment. Cisco anticipates completing these installations by the end of the fiscal year. Despite the revenue drop, Cisco’s shares rose by 8% during extended trading.
In the third fiscal quarter, Cisco’s revenue decreased by about 13% to $12.7 billion, still exceeding LSEG’s estimate of $12.53 billion. Adjusted earnings were 88 cents per share, also beating the consensus of 82 cents, although net income fell by 41% to $1.89 billion. Network revenue, the primary source of sales, dropped by 27% to $6.52 billion.
To boost its artificial intelligence capabilities, Cisco completed the $28 billion acquisition of security software maker Splunk. This acquisition is expected to enhance Cisco’s cybersecurity and AI ambitions, positioning the company to compete with industry rivals such as Palo Alto Networks and CrowdStrike Holdings. By teaming up with Microsoft and expanding its partnership, Cisco is aiming to cater to its customers’ digital transformation needs more effectively.
Cisco revised its fiscal 2024 guidance, raising the full-year revenue projection to a range between $53.6 billion and $53.8 billion. The company also narrowed the adjusted earnings forecast to $3.69 to $3.71 and expects a low- to mid-single-digit growth rate for fiscal 2025 revenue.
CEO Chuck Robbins expressed optimism about Cisco overcoming supply chain challenges and taking significant steps in the AI space. While recent quarters have been challenging, there are early signs of a recovery in business spending.
In conclusion, Cisco surpassed analysts’ expectations in the fiscal third quarter despite a steep decline in revenue. The company’s acquisition of Splunk positions it for AI advancements, while partnerships with Microsoft reinforce its commitment to driving customer digital transformation. The revised guidance for fiscal years 2024 and 2025 indicates Cisco’s confidence in its future growth prospects.
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