Cisco fails to impress investors with its quarterly performance results despite beating analysts’ estimates

Cisco fails to impress investors with its quarterly performance results despite beating analysts’ estimates

  • Cisco fails to impress investors with its quarterly performance results despite beating analysts’ estimates.
  • Cisco generates $12.01 billion in revenue in Q2 versus the analysts' estimate of $11.98 billion.
  • Cisco made 77 cents of earnings per share versus the analysts' estimate of 76 cents.

Cisco’s second-quarter performance results on Wednesday failed to impress the investors despite beating the analysts’ estimates for earnings and revenue. As per the experts, investors were wary of a continuous decline in the American multinational technology conglomerate’s revenue that saw a 4% decline in its stock in extended trading on Wednesday.

Cisco’s Figures Versus Analysts’ Estimates

According to Refinitiv, experts had anticipated Cisco to generate $11.98 billion in revenue in the fiscal second quarter. In terms of earnings per share (EPS), they had forecast 76 cents in the recent quarter. In its earnings report on Wednesday, the technology company announced a higher $12.01 billion in revenue in Q2 while the EPS marginally beat the estimate and recorded 77 cents of earnings per share. Cisco’s second-quarter revenue marked a 4% growth as compared to the revenue noted in the same quarter last year.

While Cisco has kept its reputation as the leader of the data center market, its growth in the past few years has been weaker. Experts attribute the slower pace in growth to a shift in the trend of spending in the niche of IT with the prominent players of the cloud computing market stealing most of it while the traditional hardware manufacturers struggle to improvise with the leftovers.

Excluding items, the company anticipated 79 cents to 81 cents of earnings per share in the fiscal third quarter. The annualized decline in revenue, as per Cisco, is also expected to drop by 1.5% to 3.5% in the upcoming quarter. While the guidance for the next quarter was stronger than the analysts’ forecast, the company highlighted that the aforementioned figures don’t account for the potential impact of the recent outbreak of Coronavirus in China on the company’s supply chain and overall regional operations.

Cisco Gained 5% In 2019 Versus A Significantly Higher 22% Gain In S&P 500

Applications and Infrastructure Platforms recorded an 8% decline (year over year) in revenue in the second quarter with the former generating $1.3 billion and the latter posting $6.5 billion in quarterly revenue. Both these segments mark the largest businesses for Cisco.

While the benchmark S&P 500 printed a massive 22% gain in 2019, Cisco was able to improve by a mere 5% in the stock market last year. Compared to its competitors like Alphabet, Microsoft, and Amazon, Cisco’s performance in 2019 was even more disappointing. Currently exchanging hands at $47.32, it has lost around 2% in 2020 so far.

By Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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