Shares in Cisco Systems rose after posting better revenue and profit of the first quarter of the fin. 2021 and forecast for the second quarter than analysts had expected. CEO of Cisco said that he sees “signs of improvement” for business.
Shares of Cisco Systems (CSCO), which fell by 19.4% since the beginning of the year, rose 7.3% in after-hours trading Thursday when the company published the report for the first quarter of fiscal 2021, which ended October 31.
Cisco Systems reported a 10% decline in earnings per share (compared to the same quarter last year) to $0.76, but that’s $0,06 more than the average analyst estimate of $0.70 mark.
The amount of profit (net income) decreased from $3.6 billion in the first quarter of the fin. 2019 to $3.2 billion
Total quarterly revenue dropped for the fifth consecutive quarter to $11.9 billion, but also exceeded Wall Street estimates of $11, and 85 billion.
“Cisco has a confident start to the 2021 fiscal year, and we are encouraged by signs of improvement in our business as we continue to overcome the pandemic and other macroeconomic uncertainties,” said Chuck Robbins, President and CEO of Cisco.
“Our first quarter results reflect good execution with high profitability in challenging conditions,” said Cisco CFO Kelly Kramer, December 18, which will be replaced by Scott Herren.
“We continued to transform our business by offering more software products and subscriptions, which led to an increase in debt by 10% compared to last year. We have achieved significant growth in operating cash flow and returned to shareholders $2.3 billion,” added Kramer.
Cisco is in a state of continuous transformation, as its leadership has set a goal to increase the share of business software and subscriptions, thus reducing dependence on the business of selling network equipment to state agencies, corporations and suppliers of video and telephone services.
The income they currently bring the most income for the company, but the pandemic COVID-19 forced the customers (private companies and some state enterprises) to reduce the cost of expensive equipment and will appeal to companies of cloud computing.
Revenue Cisco Infrastructure Platforms, which include network switches for data centers, plunged 16% to $6,34 billion, reaching projections of $6.45 billion among analysts.
Orders in the public sector increased by 5% compared to the same period last year, while bookings in corporate, commercial and service segments decreased.
Revenue applications that includes the service of video calls and Webex software to monitor AppDynamics, totaled $1.38 billion, less than the analytical estimate of $1,40 billion.
In the quarter Cisco acquired BabbleLabs, a company with software that can improve the quality of calls and improve the Webex software.
Forecast Cisco for the second quarter of the fin. 2021
Forecast earnings per share Cisco is a range from $0.74 to $0.76, so that the average analytic forecast of $0.73 per earnings per share.
The company expects a decline in revenues of 2%, while analysts had expected revenue of $11,63 billion, which implies a decline of 3%.
The average price target on Cisco shares among the twenty analysts is $47,33 (high $55, low $36), which represents a growth by 22.39% compared with the closing price on Thursday of $of 38.67.
A rating of “buy” gave eleven analysts evaluated nine “hold” and none of the twenty gave a rating of “sell”.