Cisco beats earnings expectations as AI spurs networking gear demand
Recasts paragraph 1, adds shares in paragraph 2, details about results in paragraphs 9, 10, background in paragraph 6
Nov 13 (Reuters) -Cisco Systems CSCO.O forecast quarterly revenue and profit above Wall Street estimates after posting upbeat first-quarter results, helped by improving demand for its networking gear amid the AI boom.
Shares of the computer networking equipment maker were down 1.4% in extended trading after the company forecast annual revenue broadly in line with estimates.
Companies have been ramping up investmentsin AI technologies which require heavy computing power, creating a spike in demand for data centers, which use Cisco's products such as ethernet switches and routers.
However, the California-based company has been trying to reduce reliance on its massive networking equipment business, which has suffered in recent years from supply chain issues and a post-pandemic slowdown in demand.
The company had announced two rounds of layoffs this year in a bid to cut costs, as it shifts focus to cybersecurity, cloud systems and AI-driven products.
Cisco completed its $28 billion acquisition of Splunk in March, which aims to boost its software business amid an AI boom while also helping to offset a post-pandemic slowdown in demand by enhancing its cybersecurity capabilities.
The company expects second-quarter revenue to be between $13.75 billion and $13.95 billion, which was above analysts' average estimate of $13.73 billion, according to LSEG-compiled data.
It forecast quarterly adjusted profit per share of 89 cents to 91 cents, compared with estimates of 87 cents.
The company's revenue fell 6% to $13.84 billion in the first quarter ended Oct. 26, beating estimates of $13.77 billion. Adjusted profit per share of 91 cents also beat estimates of 87 cents.
Cisco now expects annual revenue to be between $55.3 billion and $56.3 billion, compared with its earlier forecast of between $55.0 billion to $56.2 billion. Analysts were expecting $55.89 billion.
It raised its annual adjusted profit forecast range to $3.60 to $3.66, from $3.52 to $3.58.
Reporting by Jaspreet Singh in Bengaluru; Editing by Maju Samuel
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
