Cisco’s Shares Fall on Disappointing Growth In This Business
Cisco Systems’s revenue from its closely-watched security business rose less than analysts had estimated in the fourth quarter, sending the company’s shares down about 2.5% in after-hours trading on Wednesday.
Revenue from Cisco’s switching business, easily its largest, also missed Wall Street’s estimates, resulting in the company’s total revenue falling for the seventh straight quarter.
With its traditional business of making switches and routers struggling, Cisco, like other legacy technology firms, is focusing on high-growth areas such as security, the Internet of Things and cloud computing.
In Cisco’s security business, which offers firewall protection and breach detection systems, revenue rose 3% to $558 million, but fell short of analysts expectations of $580.5 million, according to financial and data analytics firm FactSet.
Revenue from Cisco’s switching business fell 9% to $3.44 billion, missing analysts’ average estimate of $3.57 billion, according to FactSet.
But revenue in the company’s wireless and data center businesses topped analysts’ estimates, helping overall revenue meet expectations.
The world’s largest network gear maker said revenue fell nearly 4% to $12.13 billion in the fourth quarter ended July 29.
Analysts on average were expecting revenue of about $12.1 billion, according to Thomson Reuters I/B/E/S.
Cocco’s net income fell to $2.42 billion, or 48 cents per share, from $2.81 billion, or 56 cents per share.
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Excluding one-time items, it earned 61 cents per share, in line with analysts’ estimates.
The company’s earnings and revenue forecast for the current quarter was largely in line with analysts’ estimates.