Home Stock Cisco is down 7.0% in extended trading on Wednesday: here’s why

Cisco is down 7.0% in extended trading on Wednesday: here’s why


Shares of Cisco Systems Inc (NASDAQ: CSCO) slid about 7.0% in after-hours trading on weaker-than-expected revenue for the fiscal first quarter and tepid guidance for the future.

Q1 financial performance

Cisco said its net income printed at $3.0 billion that translates to 70 cents per share. In the comparable quarter of last year, its net income was capped at $2.2 billion or 51 cents per share. On an adjusted basis, the computer-networking company earned 82 cents per share.

The American multinational generated $12.9 billion in revenue that represents an annualised growth of 8.0%. According to FactSet, experts had forecast 80 cents of adjusted EPS but a higher $12.98 billion in revenue.

Gross margin slid to 62.4% in the recent quarter from last year’s 63.6%. Cisco had $23.3 billion in cash, cash equivalents, and investments as of the end of Q1, as per the earnings press release.

Guidance for the future

For the full financial year, Cisco now forecasts up to $3.45 of adjusted per-share earnings on 5.0% to 7.0% growth in revenue, including 80 cents to 82 of adjusted EPS it expects in the current quarter on up to 6.5% increase in revenue.

Analysts are also calling for 82 cents of adjusted earnings per share in the fiscal second quarter. According to CEO Chuck Robbins:

Cisco’s technology sits at the heart of the accelerated digital transformation happening today. Our breakthrough innovation, strong demand, and the success of our business transformation position us well for another year of growth in fiscal 2022.

The report comes more than a month after Treasury Partners’ Richard Saperstein said the supply chain constraints were already factored into Cisco as he built a bullish case for the stock.

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