(Bloomberg) — Cisco Systems Inc., the biggest maker of computer networking equipment, delivered better-than-expected quarterly results and an upbeat outlook for the current period, but a conservative annual forecast brought a muted reaction from investors.
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Sales will be $55.3 billion to $56.3 billion in fiscal 2025, which runs through July, Cisco said in a statement Wednesday. Though that was an uptick from its previous outlook, the midpoint of the range fell short of the $55.9 billion that analysts predicted.
Cisco — seen as a bellwether for corporate technology spending — has been working to bounce back from a yearlong slump. Customers delayed purchases while they dealt with a buildup in orders, but growth in orders is now coming back. The question for investors and analysts is how quickly.
The concerns weighed on the shares in late trading, with the stock sliding more than 2%. It had increased 17% this year heading into the earnings report, closing at $59.20 in New York.
Sales will be $13.75 billion to $13.95 billion in the fiscal second quarter, which ends in January, the company said. That compares with an average analyst estimate of $13.74 billion.
“I feel good about where we are product-wise and in our markets,” Chief Financial Officer Scott Herren said in an interview. “There’s pretty good acceleration.”
Cisco is seeing a strong rebound in spending by corporations across all sectors and geographies, Herren said. It’s also benefiting from spending on the machinery needed to support AI computing. The company is well ahead of its $1 billion target for orders from the biggest data center operators for that type of gear, he said.
But the US federal government, Cisco’s biggest customer, is a weak spot. The change in administrations and the nature of federal budgeting means that some projects aren’t being greenlit, Herren said. Still, Cisco is confident that the orders will return quickly once a new budget is in place.
Sales declined 6% to $13.8 billion in the first quarter, which ended Oct. 26. But that was better than the $13.77 billion estimated by analysts. The revenue growth expected in the current period would be the first gain in a year.
First-quarter profit was 91 cents a share, minus some items. Wall Street projected 87 cents. Orders expanded 20%, following an increase of 14% in the preceding three months.
