Cisco Systems (CSCO) on Wednesday reported fiscal second-quarter earnings and revenue that fell from a year earlier but topped consensus estimates as product orders fell again. The company’s guidance for CSCO stock in the current April-ending quarter missed expectations.
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Cisco earnings fell 1% from a year earlier to 87 cents on an adjusted basis. Revenue fell 6% to $12.8 billion. Analysts estimated that Cisco would earn 84 cents on revenue of $12.71 billion, according to FactSet.
On the stock market today, Cisco stock fell more than 5% to 47.51 in extended trading.
The company plans to slash 5% of its workforce, roughly 4,200 jobs, in another round of cost-cutting.
Heading into the Cisco earnings report, Wall Street analysts expected weakness in the “enterprise” market — corporate and government sales.
CSCO Stock: Revenue Outlook Light
For the April quarter of fiscal 2024, Cisco forecasts earnings of 85 cents at the midpoint of guidance vs. analyst estimates of 92 cents.
In addition, Cisco says it expects sales of $12.2 billion at the midpoint of its outlook. Analysts predicted that sales will fall 3.7% to $13.09 billion.
While Cisco has increased revenue from software and services, it still garners over two thirds of revenue from computer networking gear, mainly switches and routers. While the enterprise market has weakened, Cisco’s telecom customers also are spending less.
Analysts expect some upside in 2025 from cloud computing giants hiking investments in artificial intelligence infrastructure.
Cisco Stock: Splunk Deal
Heading into the Cisco earnings report, the company owned a weak Relative Strength Rating of 30 out of a best-possible 99, according to IBD Stock Checkup.
CSCO stock had retreated 2% in 2024, prior to Thursday’s sell-off. Over the past year, CSCO stock has gained 3%.
In September, Cisco agreed to buy software company Splunk (SPLK) for $28 billion in cash. The Splunk deal is expected to close in 9-12 months. With roots in data analytics software, Splunk has expanded into cybersecurity.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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