Cisco Shares Drag Lower after Revealing Earnings Report

Shares of Cisco were falling 4% in after-hours trading on Wednesday as the company reported its latest quarterly report.

The company beat on both the top and bottom lines in the second quarter, but Wall Street was more concerned with the lackluster growth for the quarter.

For the quarter, Cisco reported earnings of 77 cents per share while 76 cents was expected. Revenue at $12.01 billion was better than the $11.98 billion expected according to Refinitiv.

Revenue for Cisco’s two largest business segments, Infrastructure Platforms and Applications, were both down 8% year over year, at $6.5 billion and $1.3 billion, respectively.

Looking ahead to the third quarter, the company says it projects earnings per share to be in the range of 79 cents to 81 cents, excluding certain items. The company also expects a revenue decline of 1.5% to 3.5%.

Chuck Robbins, the Chairman and Chief Executive Officer of Cisco said on the earnings call, “The long term secular growth trends of 5G, WiFi 6, 400-gig and the shift to the cloud remain and we expect to benefit from them.”

He added, “This is a multi-year transformation and we are managing our business well while staying focused on helping our customers build simpler, more secure, and cost effective networks. The broad adoption of multi-cloud and modern application environments is changing how the world’s largest networks are built, operated, and secured and Cisco is at the center of this transition. We have made significant investments in the development of software, silicon, and optics, the building blocks for the Internet of the future.”

He continued, “We believe this strategy will change the economics of how the Internet will be built to support 5G, 400-gig, and the demands of the future while helping our customers innovate and move faster than ever before. In December, we introduced Cisco Silicon One, a first-ever single unified silicon architecture and the Cisco 8000 carrier-class router family built on Silicon One as well as our new IOS XR7 operating system. We also announced new flexible purchasing options that enable customers to consume our technology however they choose. We also collaborated closely with several of the largest web scale and SP companies throughout the development process. Their participation in our launch demonstrates their strong support of our strategy as well as our commitment to continued innovation. Our goal is to accelerate the deployment of next-generation Internet infrastructure by offering our customers choices of components white-box or integrated systems in a flexible consumption model.”

Cisco has gained 5% in the past year.

Disclaimer: We have no position in Cisco Systems, Inc. (NASDAQ: CSCO) and have not been compensated for this article.