Cisco shares plunged by as much as 17% in extended trading on Wednesday after the networking company said it generated lower quarterly revenue than analysts predicted and called for an unexpected sales decline in the current period.
Here’s how the company did:
- Earnings: 87 cents per share, adjusted, vs. 86 cents per share as expected by analysts, according to Refinitiv.
- Revenue: $12.84 billion, vs. $13.34 billion as expected by analysts, according to Refinitiv.
Cisco’s revenue was roughly flat year over year in the quarter, which ended on April 30, according to a statement. Net income, at $3.04 billion, rose by 6%. In the previous quarter, revenue grew by 6%.
China’s Covid lockdown and the war between Russia and Ukraine weakened Cisco’s revenue in the quarter, CEO Chuck Robbins said in the statement. The war reduced revenue by about $200 million, and it added $5 million to Cisco’s cost of sales in the quarter and $62 million in operating expenses, according to the statement.
For the fiscal fourth quarter, Cisco called for 76 cents to 84 cents in adjusted earnings per share and a year-over-year decline in revenue of 1% to 5.5%. Analysts polled by Refinitiv had been looking for earnings of 92 cents per share on $13.87 billion in revenue, or growth of about 6%. The guidance range is wider than usual because of the increasingly complex environment, Robbins said on a conference call with analysts.
“We believe that our revenue performance in the upcoming quarters is less dependent on-demand and more dependent on the supply availability in this increasingly complex environment,” he said.
The company said its Secure, Agile Networks segment, which includes data-center networking switches, contributed $5.87 billion in revenue. That represents 4% growth, and it’s lower than the $6.09 billion consensus among analysts polled by StreetAccount.
Cisco’s Internet for the Future unit, which contains routed optical networking hardware the company picked up through its 2021 Acacia Communications acquisition, contributed $1.32 billion, up 6% and below the $1.44 billion StreetAccount consensus.
The Collaboration segment that includes Webex collaboration software kicked in revenue of $1.13 billion, down 7% and in line with the StreetAccount consensus of $1.13 billion.
As of the close, Cisco shares were 23% since the start of the year, while the S&P 500 has dropped about 18% over the same period. Should the stock drop by more than 16.2% on Thursday, it would be the steepest single-day decline since a 17.7% plunge in July 1994 and the third biggest on record.
— CNBC’s Ari Levy contributed to this report.
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