Market News

Cisco’s Results Disappoint, Revealing a Challenging April

High-tech stalwart Cisco Systems (CSCO) was one of the first major companies to report results for the fiscal quarter that ended in April. The results posted Wednesday afternoon are more reflective of the impact of Covid-19 than those in other recent earnings calls which only reflected results through March. And the results were grim: Cisco’s revenue for its fiscal third quarter fell 8% year-over-year to about $12 billion, its worst decline in six years. 

And yet, its per-share adjusted earnings of 79 cents on revenue of $11.98B easily beat analysts’ bleak target of 71 cents. The service and security segments managed modest revenue growth in the quarter. And of course, usage of WebEx videoconferencing, one of Zoom’s (ZM) primary competitors, grew strongly. Cisco’s shares rose 2% following the results.

Cisco entered the pandemic from a position of relative weakness. The company has been citing a “broad based slowdown” affecting results for the last couple of quarters, and the pandemic has worsened conditions considerably for corporate tech. Market research firm Gartner revised its global IT spending forecast for the full year, projecting negative 8% growth, against a pre-Coronavirus forecast that called for a 3.4% rise.

Cisco said it’s expecting 72 cents to 74 cents in adjusted earnings per share and a 8.5% to 11.5% decline in revenue for the fiscal fourth quarter. In contrast to Cisco, most companies have declined to issue new guidance, with the exception of businesses that have benefited from the pandemic or subscription-based software companies that already have booked their annual revenue. 

Analysts are moderately bullish on Cisco, with 12 Buys and 10 Hold recommendations within the last 3 months. The average analyst price target for Cisco is $47, representing upside of 4.5%. (See Cisco stock analysis on TipRanks). 

Related News:
Microsoft Buys Softomotive to Boost Its Robotic Automation Offerings
Roku Under Unvestigation By ITC for Universal Electronics Patent Infringement 
IQIYI Sinks 4% As Online Ad-Revenue Falls Sharply

Tired of arriving late to the Big Returns Party?​
Most investors don’t have major gainers like TSLA or NVDA on their radar from the start.
The profusion of opinions on social media and financial blogs makes it impossible to distinguish between real growth potential and pure hype.
​​For the past decade, we have developed and perfected technology designed to help private investors, just like you, find the best opportunities, with the greatest upside potential, in any financial climate.​
Learn More