Cisco Systems Inc. shares rose in the extended session Wednesday after the network giant’s quarterly results and outlook topped Wall Street estimates and the company’s chief executive said demand for its technology has been resilient during uncertain economic times.
CEO Chuck Robbins said on the call that Cisco’s product portfolio is “the best it’s been in years” and that economic fears have not dented sales.
“What I said several times, in a lot of interviews, is that I’ve been amazed at the resilience that we have seen around the world in light of the macro environment and the geopolitical dynamics, whether it’s a shutdown, or it’s U.S.-China trade, or it’s Brexit, or it’s stress in Italy, or it’s political unrest in certain emerging countries,” Robbins told analysts.
Cisco CSCO, -0.81% shares were up 4.2% after hours by the end of the company’s conference call with analysts, gaining some momentum from a 2.5% gain when the call started following the comments from Robbins. Cisco shares had closed down 0.8% at $47.50 for the regular session. In comparison, the Dow Jones Industrial Average DJIA, +0.46% which counts Cisco as a component, rose 0.5%, the S&P 500 index SPX, +0.30% gained 0.3% and the tech-heavy Nasdaq Composite Index COMP, +0.08% advanced less than 0.1%.
“What I will tell you is that our enterprise customers, given the focus, they really — they don’t view this technology anymore as an optional enabler of a strategy that they have come up with,” Robbins said. “They now view the technology as a core part of their strategy. So, I mean, many of the strategies they’re driving around revenue growth don’t work if they don’t continue to invest in technology.”
The networking company reported fiscal second-quarter net income of $2.82 billion, or 63 cents a share, compared with a loss of $8.78 billion, or $1.78 a share, in the year-ago period. Adjusted earnings were 73 cents a share. Of the 27 analysts surveyed by FactSet, Cisco on average was expected to post adjusted earnings of 72 cents a share for the second quarter. Cisco had forecast 71 cents to 73 cents a share.
Revenue rose to $12.45 billion from $11.89 billion in the year-ago quarter. Wall Street expected revenue of $12.42 billion from Cisco, according to 25 analysts polled by FactSet. Cisco had predicted revenue of $12.48 billion to $12.72 billion.
Total product revenue, which includes the family of Catalyst 9000 switches that are sold with a multiyear software subscription that gives the company a recurring revenue stream, rose 6% to $9.27 billion, while analysts were looking for $9.15 billion.
Of that, infrastructure platform revenue rose 6% to $7.13 billion versus the Street’s $7.07 billion view. Applications revenue surged 24% to $1.47 billion, while analysts had estimated $1.35 billion. Security revenue, which has been bolstered by the acquisition of Duo Security, grew 18% to $658 million versus the $629.2 million Street view.
Services revenue, however, came in at $3.17 billion, just shy of the $3.25 billion expected by analysts.
For the third quarter, Cisco said it expects earnings of 76 cents to 78 cents a share on 4% to 6% year-over-year revenue growth, or $12.96 billion to $13.21 billion. Analysts estimate earnings of 76 cents a share on revenue of $12.84 billion.
Also, Cisco announced its board authorized a 6% quarterly dividend hike to 35 cents a share, and a $15 billion increase to the company’s share buyback program.
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