Cisco Systems ( CSCO ) reported first-quarter financial and revenue earnings that topped consensus estimates. CSCO shares rose on Thursday as the data networking giant also announced a restructuring plan.
The company reported earnings after the stock market closed on Wednesday. Cisco’s earnings for the quarter ended Oct. 29 rose 5% year over year to 86 cents a share, topping Wall Street’s target. The company said revenue rose 6% to $13.6 billion.
Analysts polled by FactSet had estimated Cisco’s earnings at 84 cents a share on revenue of $13.31 billion.
For the current quarter ending in January, Cisco said it expects earnings of 85 cents per share, in line with estimates. Cisco projected revenue growth of 5.5% in the middle of guidance, above estimates for 4% sales growth.
CSCO share: Restructuring plan announced
In addition, Cisco announced a restructuring plan. The company said it will recognize pre-tax charges of about $600 million consisting of severance and other one-time termination benefits, property-related costs and other costs. Cisco expects to recognize about $300 million of the charge in the fiscal 2nd quarter.
“Results were slightly better than expected, largely a function of backlog reductions and an environment that is holding up relatively well,” Bank of America analyst Tal Liani said in a report. “Gross margin is expected to improve, and the company announced restructuring. Revenue and EPS beat by $300 million and 2 cents, respectively, and fiscal 2023 guidance was raised by roughly Q1’s beat factor.”
Cisco shares rose 3.1% to 45.79 in morning trading on the stock exchange today.
Heading into Cisco’s earnings report, the company owned a relative strength rating of 42 out of a possible 99, according to IBD Stock Checkup. CSCO stock had fallen 30% in 2022.
In addition, CSCO stock has moved away from its core business of selling network switches and routers. With acquisitions, Cisco has aimed to increase revenue from software and services.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on wireless 5G, artificial intelligence, cyber security and the cloud.
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