Cisco continues to demonstrate a decline in revenue due to falling demand for networking equipment. Cisco CFO resigns. The company intends to complete the acquisition ThousandEyes for $1 billion in the current quarter.
Shares of Cisco Systems (CSCO) fell nearly 6% before market open on Thursday (at the time of writing) after the publication of the results of the fourth quarter and full 2020 fiscal year ending July 25.
With the beginning of the year shares in Cisco Systems are practically not increased, in contrast to companies in the technology sector – the Nasdaq Composite rose by approximately 23%.
Key figures of financial report by Cisco
Cisco reported earnings per share of the 4th fin. quarter to $0,80, or $0,06 more than the analyst estimate of $0.74 in.
Total quarterly revenue was down 9% to $12.2 billion (a decline for the fourth consecutive quarter), but was higher than the analytical estimate of $12,08 billion.
Revenue Infrastructure Platforms, which includes sales of switches and routers for data centers, decreased by 13% (compared to last year’s value) to $6.63 billion, which is 16% lower than average analyst estimates of $6.48 bn
Quarterly revenues from Cisco sales applications, including sales of software for video, Webex, amounted to $1.36 billion, which is 9% lower than analyst estimate of $1.45 billion.
The only one that showed an increase of 10% compared to last year’s value to $814 million, became a division of security products Cisco.
By the end of 2020 fin. year, total revenues decreased 5% to $49,3 billion, the company noted that 51% of the total income was income from sales and services.
“By the end of the 2020 financial year, we achieved our goal of more than half of our revenues come from software and services, and this strategy continues to resonate with customers who are moving their organizations to digital technology,” said Chuck Robbins, President and CEO of Cisco.
The company continues its long-term restructuring, changing the direction of your business with the sale of expensive network equipment sales and subscription services. So, the hosting service, Catalyst 9000 and application management using Cisco DNA Center demonstrate successful results in helping businesses automate more of their IT departments, especially in terms of remote work at home.
The Cisco executives noted that the company is committed to “rebalancing the investment in research and development to focus on new areas and to continue to offer customers the best and most relevant technology easier and more accessible ways”.
In the current quarter, Cisco intends to complete the acquisition of the company’s software security ThousandEyes amount of approximately $1 billion. read More about the deal Marketinfo.pro wrote in the article “Cisco acquires ThousandEyes, continuing the transition to cloud-based software products”.
The company also announced that the CFO of Cisco Kelly Kramer will retire after a successor is found.
In relation to the 1 quarter of fiscal 2021 Cisco expects:
earnings per share in the range of $0,69–$0,71, which is below average analytical assessment of $0,76;
the expected fall in revenues by 7-9% and worse than analysts ‘ forecasts, pending income for the quarter of $12.25 billion, which provides for a decrease of approximately 7%.
According to Chuck Robbins, Cisco plans to cut spending by $1 billion “over the next few quarters.”