Cisco Systems Inc. shares rose in the extended session Wednesday after network giant's quarterly results and outlook peaked at Wall Street estimates and the company's CEO said the demand for its technology has been resistant during uncertain economic times.
CEO Chuck Robbins said on the call that Cisco's product portfolio is "the best it has been this year" and that financial fears have not ruined sales.
"What I said several times, in many interviews, is that I have been amazed at the resilience we have seen across the globe in the light of the macro environment and the geopolitical dynamics, whether it be a closure or it is the US China ̵
shares increased 4.2% after hours at the end of the company's conference call with analysts, which gained some momentum from a 2.5% gain when the conversation began to follow the comments from Robbins. Cisco shares had closed down 0.8% at $ 47.50 for the regular session. For comparison, the Dow Jones Industrial Average
DJIA, + 0.46%
that counts Cisco as a component, rose 0.5%, S & P 500 index
SPX, + 0.30%
was 0.3% and the technological heavy Nasdaq Composite Index
COMP, + 0.08%
advanced less than 0.1%.
"What I tell you is that our corporate customers, the focus, they really – they no longer see this technology as an optional enabler of a strategy they've come up with," Robbins said. "They now see technology as a key part of their strategy. So, I think many of the strategies they run around revenue growth don't work if they don't continue to invest in technology."
The network company reported a net revenue of $ 2.82 billion for the second quarter, or 63 cents per share, compared to a loss of $ 8.78 billion, or $ 1.78 per share, in the previous period. Adjusted earnings were 73 cents per share. Of the 27 analysts examined by FactSet, Cisco was expected to enter an adjusted earnings of 72 cents per share for the second quarter. Cisco had forecasted 71 cents to 73 cents per share.
Revenues rose to $ 12.45 billion from $ 11.89 billion in the quarter. Wall Street expected sales of $ 12.42 billion from Cisco, according to 25 analysts asked by FactSet. Cisco had predicted sales of $ 12.48 billion to $ 12.72 billion.
Total product revenue, which includes the family of Catalyst 9000 switches sold with a multi-year software subscription that gives the company a recurring revenue stream, increased by 6% to $ 9.27 billion while analysts are looking for $ 9.15 billion.
Thus, the infrastructure platform's revenue increased 6% to $ 7.13 billion compared to Street's $ 7.07 billion. Program revenue increased by 24% to $ 1.47 billion, while analysts had estimated $ 1.35 billion. Security revenue, which has been boosted by the acquisition of Duo Security, grew 18% to $ 658 million compared to the Street View view of $ 629.2 million.
However, revenue from services came in at $ 3.17 billion, only shy of $ 3.25 billion expected by analysts.
In the third quarter, Cisco said it expects earnings of 76 cents to 78 cents per share of 4% to 6% during the quarter, or $ 12.96 billion to $ 13.21 billion. Analysts estimate earnings of 76 cents per share on revenue of $ 12.84 billion.
Cisco also announced that the board approved a quarterly dividend increase of 6 percent to 35 cents per share, and an increase of $ 15 billion to the company's equity program.
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