Cisco shares rebound on demand

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Cisco

Shares rose in late trading on Wednesday, after the networking giant showed signs of improvement in orders for its products.

Cisco’s forecasts for the 2024 fiscal year were lower than Wall Street’s estimates, but the results of the company’s fourth fiscal quarter, which ended in July, exceeded the company’s expectations for both revenue and profits.

Cisco stock initially fell 2% in late trading after the report, but rebounded after the company made positive comments about its orders during an investor call. Shares were up about 4% as of 4:45 p.m. ET.

For the fourth fiscal quarter ended July 29, Cisco (stock symbol: CSCO) reported revenue of $15.2 billion, up 16% from a year ago, ahead of the Wall Street consensus of $15.1 billion, and at the high end of the company’s growth forecast. from 14% to 16%. On an adjusted basis, the company earned $1.14 a share, ahead of the company’s forecast of $1.05 to $1.07 a share. Under GAAP, Cisco earned 97 cents a share. The company said operating cash flow was $6 billion, up 62 percent from the year-ago quarter.

The company’s largest unit, Secure and Agile Networking, had revenue of $8.1 billion, an increase of 33%. Cisco’s collaboration unit, which includes WebEx, was down 12%.

For the full year, revenue was $57 billion, an increase of 11%, and non-GAAP earnings were $3.89 per share.

For the first quarter of the fiscal year, Cisco projected revenue of $14.5 billion to $14.7 billion; In the middle of the range, it is in line with the Wall Street consensus of $14.6 billion. Cisco sees non-GAAP earnings of $1.02 to $1.04 per share, just over the $1 consensus. The company expects GAAP earnings for the quarter of 79 to 84 cents a share.

For the full year, Cisco expects revenue of $57 billion to $58.2 billion, which would be in the middle of the range, up just 1% from last year, and below the Street consensus of $58.3 billion. Cisco sees full-year adjusted earnings of $4.01 to $4.08 per share, which, at the halfway point, is roughly in line with the consensus of $4.04 per share.

CEO, Chuck Robbins, noted on the earnings call that product orders in the quarter rose 30% sequentially, with double-digit increases across all customer markets.

Cisco faced heavy demand heading into the quarter. Last month, shares of both

Nokia

(NOK) and

Ericsson

Eric fell after companies warned that the spending outlook for US airlines looked weak in the second half. Nokia blamed the “macroeconomic environment and customer inventory digestion”.

a few weeks later,

Juniper Networks

JNPR shares fell after the company warned it was seeing weak bookings activity, particularly from cloud customers. Juniper blamed the same factors Nokia cited: economic issues and high customer inventories.

It was better in

Arista Networks

(ANET), which published strong quarterly results in June, though Arista warned it was seeing a “return to shorter lead times and reduced visibility.”

Cisco faced a volatile environment, “with peers reporting an uptake period for telecom and cloud customers,” Amit Daryanani, an analyst at Evercore ISI, wrote in a note reviewing the quarter, offset by strong demand from other large companies.

Write to Eric J. Savitz at eric.savitz@barrons.com