Cisco lowers annual forecasts on a slowdown in new orders. Cisco Systems (CSCO.O) reduced its full-year sales and profit estimates, hinting that demand for the company’s networking equipment was declining. As a result, the company’s shares dropped over 11% after the market closed.
In recent years, the firm has struggled with supply chain concerns and a post-pandemic slump in demand, which has quickened its push into software solutions such as cybersecurity. In addition, the company has been dealing with several other challenges.
In September, Cisco announced that it had agreed to purchase the cybersecurity company Splunk (SPLK.O) for around $28 billion. This was done to expedite Cisco’s diversification efforts and capitalize on the growth in the artificial intelligence industry.
Cisco indicated that it saw “a slowdown of new product orders in the first quarter … and believes the primary reason is that customers are currently focused on installing and implementing products in their environments”.
According to the company’s estimations, one to two-quarters of all orders for sent products still await customers’ actions to implement them. According to the company’s CFO, Scott Herren, the business anticipates “a return to order growth in the second half of the year.”
Cisco forecasts that it will bring in sales between $53.8 billion and $55.0 billion for the entire year, with adjusted earnings per share falling between $3.87 and $3.93.
Beforehis announcement, the business projected that its annual sales would range from $57.0 billion to $58.2 billion and that its adjusted per-share profits would fall infrom4.01 to $4.08.
In contrast to its competitors, Juniper Networks (JNPR.N) and Arista Networks (ANET.N), which reported positive earnings last month on robust enterprise expenditure, Cisco’s results were less than stellar.
According to the statistics provided by LSEG, Cisco anticipates a sales range of between $12.6 billion and $12.8 billion for the second quarter, falling short of the analysts’ projections of $14.19 billion.
The majority of the supply chain restrictions “are now behind us,” firm officials stated on a post-earnings teleconference, adding that shipping lead times and backlog have mostly returned to normal. This is even though the macro problems persist.
When considering one-time costs and expenses, Cisco’s earnings per share in the first quarter were $1.11, higher than the projections of $1.03. The revenue also exceeded projections.
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