Cisco signals hope for tech as earnings fall but beat expectations
SAN FRANCISCO -- The news propelled Cisco shares up 2.2% to $20.05 in after-hours trading Wednesday. The company announced results after markets closed. Shares closed at $19.61 in regular trading and are down 41% from their 52-week high of $27.72 in June.
The networking equipment maker's earnings were $1.4 billion, or 23 cents a share, during its fiscal third quarter which ended April 25. That's down from the $1.8 billion, or 29 cents a share, that Cisco earned in the same quarter a year ago.
Excluding one-time charges, Cisco earned 30 cents a share, which is 5 cents a share above the average estimate of analysts polled by Thomson Reuters.
Revenue tumbled 17% to $8.16 billion from the year-ago quarter. Analysts expected $8.15 billion.
The tech bellwether's reasonably stable results come three weeks after Intel posted encouraging financial results and said PC sales bottomed in February.
"It looks like the (tech) free fall has ended," says Simona Jankowski, an analyst at Goldman Sachs.
Nonetheless, Cisco continues to feel the effects of a downturn in tech spending.
It cautioned that fiscal fourth-quarter sales will decrease 17% to 20% from a year earlier — in line with Wall Street's projections.
Cisco is vulnerable to economic downturns because its routers and switches, which direct traffic over the Internet, each can cost hundreds of thousands of dollars. That's the kind of big expense that companies try to cut when times get tough, Jankowski says.
Still, Cisco is well positioned in growing markets, such as high-end videoconferencing and wireless home networks, Cisco Chief Financial Officer Frank Calderoni said in an interview.
