Cisco’s Weak Forecast Sends Shares Plunging 5%

Share This Article
November 16, 2016 4:37pm NASDAQ:CSCO

Cisco logo

Networking equipment giant Cisco Systems, Inc. (NASDAQ:CSCO) posted solid fiscal Q1 numbers late today, but its surprsingly weak forecast sent shares significantly lower.

The San Jose-based company reported Q1 adjusted net income of $0.61 per share, beating out analysts’ $0.59 estimate by two cents. Revenues fell 2.6% from last year to $12.35 billion, also edging out Wall Street’s view of $12.33 billion.

Cisco noted that product revenue was down 1% in the latest period, which was more than offset by a 7% rise in service revenue. Geographically, revenue in the Americas fell 1%, EMEA was flat, and APJC rose 6%.

Product revenue performance was led by Security and NGN Routing which increased 11% and 6%, respectively. Switching decreased 7%, Collaboration and Data Center each decreased 3%, and Wireless and Service Provider Video each decreased 2%.

Deferred revenue rose 12% to $17 billion, helped mainly by subscription-based and software offerings. Deferred service revenue also saw strong growth, up 8%. Non-GAAP total gross margin was 65.2%, up from 64.5% in the first quarter of fiscal 2016.

Looking ahead, Cisco issued weaker-than-expected second quarter earnings guidance of $0.55 to $0.57 per share, which would miss Wall Street’s $0.59 estimate. Q2 revenues are expected to fall 2% to 4% to a range of $11.27 to $11.51 billion. That would also fall very short of analyst expectations of $12.15 billion.

The company commented via press release:

“We had a good quarter despite a challenging global business environment and we performed well in our priority areas… We executed well in Q1 delivering profitable growth, and saw strong adoption of our subscription-based and software offerings as we transition our business to a more recurring revenue model.”

Cisco shares fell $1.47 (-4.66%) to $30.10 in after-hours Wednesday trading. Prior to today’s report, CSCO had gained 16.31% year-to-date.


9 "Must Own" Growth Stocks For 2019

Read Next

Get Free Updates

Join over 50,000 investors who get the latest news from!

Most Popular

Explore More from

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again! respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories