Cisco Shares Dive on Forecast, But a Stream of Products Coming

Cisco Systems beat Wall Street estimates Thursday, but offered a weak forecast for future earnings, sending shares down more than 5 percent in after-hours trading.

The San Jose networking company reported a 33 percent jump in first-quarter profit from the same quarter last year, and yearly revenue growth of 3.6 percent.

CEO Chuck Robbins [pictured] called it "a very strong quarter," saying that Cisco is "aggressively driving our cloud business" and delivering value in deferred revenue from software and cloud sales.

But the company's second-quarter guidance for revenue growth of zero to 2 percent disappointed. Robbins said it partly reflects lower-than-expected growth in the first quarter due to various macroeconomic challenges and currency impacts. The company forecast unadjusted earnings of 53 to 55 cents a share.

"Yes, the guidance is lower," Robbins told analysts in a conference call. "I don't take that lightly, but nothing has changed about how I feel about the business."

Robbins said Cisco will announce a project with a major cloud provider next week, and has a "a nice, steady stream of new products" coming soon from the smaller, more agile teams he has encouraged.

"We are very well positioned for the second half," he said.

The giant San Jose networking company said its sales in the first quarter totaled $12.7 billion and earnings were 48 cents a share, or 59 cents excluding some one-time expenses.

Analysts surveyed by Thomson Reuters on average had expected sales of $12.65 billion and earnings of 45 cents a share, or 56 cents excluding some costs. Profit came in at $2.4 billion.

Cisco makes network switching gear and routers and other products for data centers, along with security systems and a range of services including support.

Like other longtime networking and data management companies, it is racing to keep pace with a rapidly evolving landscape in which cloud computing rather...

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