Market Spooked. Again.By Reuters | Print
Cisco's quarter earnings call set the stage for a dismal revenue outlook that stunned analysts who had expected a recovery in tech spending.
While Cisco has a good track record of beating Wall Street's expectations, it wouldn't be the first time its outlook and CEO's comments spooked the market.
Chambers' warning last quarter about "unusual uncertainty" among customers had also sparked a sell-off.
Cisco's customers, who cut back during the recession, have recently begun spending more on their network infrastructure, with phone companies buying more advanced equipment to handle growing smartphone traffic and corporate clients upgrading their data center equipment.
But the pace of recovery has been in doubt, with both companies and government agencies trying to control their costs by trying to do more with less.
Cisco said revenue in the fiscal first quarter ended Oct. 30, rose 19 percent from a year earlier to $10.75 billion. That was roughly in line with the market's average forecast of $10.74 billion, according to Thomson Reuters I/B/E/S.
But orders in the quarter, an indicator of sales in the coming quarters, were lower than initial estimates by over $500 million, Chambers said.
"We did see several challenges in the quarter, as you would expect given some of the numbers we discussed," he said. "These areas include certain categories of our public sector segment, certain product in our service provider segment, and to a limited extent, Europe, in terms of business momentum."
But the company, as usual, managed to limit the impact on its bottom line for the first quarter. Net profit rose to $1.9 billion, or 34 cents a share, from $1.8 billion, or 30 cents a share, a year earlier. Excluding items, earnings per share rose to 42 cents, beating Wall Street's expectations by 2 cents.
Shares of the company crumbled to $21.15 in after-hours trade. They had gained around 20 percent since hitting a year's low at the end of August, as the tech sector rallied on hopes of a recovery in spending. (Reporting by Ritsuko Ando and Edwin Chan; Editing by Bernard Orr)