Cisco Sales Fall in Latest Quarter
By Todd Horwitz
Cisco Systems Inc. said global economic uncertainties have slowed technology investments decisions at some companies, denting the network-equipment giant’s sales growth.
The router maker, seen as a proxy for hardware demand from corporations, on Wednesday said it expects revenue to drop between 1.5% and 3.5% in its current quarter. The decline would come on top of a 3.5% year-over-year drop in revenue for the company’s fiscal second quarter, which ended Jan. 25.
“We are seeing longer decision-making cycles across our customer segments for a variety of reasons including macro uncertainty as well as unique geographical issues,” Chief Executive Chuck Robbins told analysts. Cisco’s stock has gained just 5% in the past year, trailing the nearly 22% gain for the S&P 500 and even further behind the performance of Amazon, Microsoft and Alphabet.
CEO Chuck Robbins told CNBC in November that large customers are pausing spending plans because of global economic uncertainties related to Brexit and the U.S.-China trade deal. In Davos last month, at the World Economic Forum, Robbins said in an interview that while the domestic economy is strong, “we’ve also seen other indicators that outside the U.S. it’s a little more sluggish.”
Overall, Cisco reported $12 billion in revenue for the latest period, compared with $12.45 billion the year earlier. The latest results beat analysts’ forecasts. Cisco’s infrastructure-platforms business, covering its main networking hardware and software products, reported an 8% decline in sales to $6.53 billion in the latest quarter.
The company’s applications unit, which includes videoconference and tools for monitoring various applications, generated $1.35 billion in revenue, also down 8%. Revenue fell 5% in the company’s Americas region and 1% in the region including China and Japan. San Jose, Calif.-based Cisco reported a quarterly net income of $2.88 billion, or 68 cents a share, up from $2.82 billion, or 63 cents a share, the year earlier. Its adjusted profit of 77 cents a share was a penny higher than analysts polled by FactSet predicted for that metric.
Todd “Bubba” Horwitz