Cisco forecast disappoints as global worries weigh on client spending

By Akanksha Rana (Reuters) - Cisco Systems Inc on Wednesday forecast second-quarter revenue and profit below expectations as increasing global economic uncertainties kept clients away from spending more on its routers and switches.

Reuters November 14, 2019 06:06:23 IST
Cisco forecast disappoints as global worries weigh on client spending

Cisco forecast disappoints as global worries weigh on client spending

By Akanksha Rana

(Reuters) - Cisco Systems Inc on Wednesday forecast second-quarter revenue and profit below expectations as increasing global economic uncertainties kept clients away from spending more on its routers and switches.

Shares of the company fell 5% to $46.01 after bell as investors worry over the growth of the network gear maker, which has been shifting its focus to cyber security and software.

Wall Street has been fretting over the impact of the U.S.-China trade war on the company's sale of switches and routers, as some of these are made in China.

Cisco said in August U.S. tariffs along with Chinese customers shunning its network gear were hurting its business.

Total product orders fell 4% in the first quarter, with product orders in Asia Pacific, Japan and China region slipping 5%, Cisco said.

"We began to see some early signs of some macro impact towards the end of Q4. And we just basically saw that continue throughout the quarter," Chief Executive Officer Chuck Robbins said on a post earnings call with analysts.

"The entire (first) quarter was worse than we had expected when we began and it was fairly broad-based."

Elazar Advisors analyst Chaim Siegel said the company's results pointed to a slowdown spreading globally, which was not a good sign for global confidence on spending.

Cisco expects revenue in the current quarter to drop by 3% to 5% from a year earlier to between $12.07 billion to $11.82 billion. Analysts were expecting revenue of $12.77 billion, according to IBES data from Refinitiv.

It forecast adjusted profit to be between 75 cents and 77 cents per share, below analysts' average estimate of 79 cents.

"This is not a one-quarter problem. It's likely a multiple quarter problem. We expect street estimates to come down across multiple quarters," Needham analyst Alex Henderson said.

The company's software and cyber security businesses helped the Dow-component beat estimates for the first quarter ended Oct. 26. Excluding items, Cisco earned 84 cents per share and beat estimates of 81 cents.

(Reporting by Akanksha Rana in Bengaluru; Editing by Arun Koyyur)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

Amazon union vote enters final stretch in watershed moment for U.S. labour
Business

Amazon union vote enters final stretch in watershed moment for U.S. labour

By Mike Spector and Jeffrey Dastin (Reuters) - The National Labor Relations Board has begun reviewing ballots from Amazon.com Inc's workers in Alabama, who have voted on whether to form a union, with momentum for future labour organizing at America's second-largest private employer hanging in the balance. Agents from the labour board began sifting through ballots sent to more than 5,800 workers at Amazon's Bessemer, Alabama-based warehouse at 10 a.m

Spotify buys Locker Room app's maker Betty Labs in live audio push
News & Analysis

Spotify buys Locker Room app's maker Betty Labs in live audio push

By Elizabeth Culliford NEW YORK (Reuters) - Spotify Inc said on Tuesday it has purchased Betty Labs, the company behind sports-focused social audio app Locker Room, to accelerate its move into live audio. New voice-based platforms, including invite-only social app Clubhouse, have seen rapid growth in recent months during the COVID-19 pandemic.

Oil falls as Suez Canal opens, dollar rallies; eyes on OPEC+ meeting
Business

Oil falls as Suez Canal opens, dollar rallies; eyes on OPEC+ meeting

By Devika Krishna Kumar NEW YORK (Reuters) - Oil prices slid on Tuesday as the Suez Canal reopened to traffic and the dollar rallied, while focus turned to an OPEC+ meeting this week, where analysts expect an extension to supply curbs to offset dim demand prospects. Brent crude fell $1.20, or 1.9%, at $63.78 a barrel by 1:12 p.m.