Cisco’s Shares Tumble on Weak Guidance

November 12, 2015, 9:40 PM UTC
Robbins listens a question from media during a news conference in New Delhi
Chuck Robbins, incoming CEO of Cisco, listens a question from media during a news conference in New Delhi, India, June 18, 2015. REUTERS/Adnan Abidi - RTX1H2S1
Photograph by Adnan Abidi — Reuters

(Reuters) – Network equipment maker Cisco Systems’ forecast second-quarter adjusted profit and revenue growth ranges below analysts’ estimates, citing a slowdown in order growth.

Shares of Cisco (CSCO), considered a bellwether for the performance of the broader network gear industry, fell 3.2% at $26.95 in extended trading on Thursday.

The company forecast adjusted profit in the range of 53 to 55 cents and revenue between flat and 2% growth, which translates to $11.94 billion to $12.17 billion.

Analysts were expecting a profit of 56 cents per share on revenue of $12.55 billion, according to Thomson Reuters I/B/E/S.

“Our guidance reflects lower than expected order growth in the first quarter, driven largely by the uncertainty of the macro environment and currency impacts,” Chief Executive Officer Chuck Robbins said in the earnings statement.

Cisco is shifting to high-end switches and routers and investing in new products such as data analytics software and cloud-based tools for data centers.

Net income rose 33 percent to $2.43 billion, or 48 cents per share, in the first quarter ended Oct. 24.

On an adjusted basis, the company earned 59 cents per share, above analysts’ average estimate of 56 cents per share.

Revenue rose 3.6% to $12.68 billion, topping $12.65 billion that analysts had expected.

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