Cisco Systems Inc (Nasdaq: ) is trading down in extended hours even though it reported market-beating results or its fiscal second quarter.
Cisco stock down on muted future guidance
Shares are pushing to the downside primarily because the management issued muted guidance for the future. Cisco is now calling for 84 cents to 86 cents of adjusted per-share earnings on up to $12.3 billion in revenue in Q3.Analysts, in comparison, were at 92 cents a share and $13.1 billion, respectively. Still, Chuck Robbins – the chief executive of Cisco Systems said in a today:
We continue to align our investments to future growth opportunities. Our innovation sits at the center of an increasingly connected ecosystem and will play a critical role as our customers adopt AI and secure their organizations.
The Nasdaq-listed firm saw its product revenue tank 9.0% in the recently concluded quarter which was partly offset by a 4.0% increase in its services revenue. CSCO is now down close to 20% versus its 52-week high.
Cisco Systems Q2 earnings snapshot
CSCO said its gross margin improved 220 basis points in its second financial quarter. According to CFO Scott Herren:We are making good progress in our business model shift to more recurring revenue while remaining focused on financial discipline, operating leverage and shareholder returns.
Cisco & NVIDIA have joined forces to revolutionize AI infrastructure in data centers! Their collaboration aims to simplify AI infrastructure deployment and management in data centers, empowering enterprises with the computing power needed for AI-driven success. pic.twitter.com/TALD2puQPv
— Shawn Chauhan (@shawnchauhan1) February 7, 2024
In December, Cisco Systems Inc bought Isovalent – a privately held networking and security company based out of Cupertino, California ().
Cisco plans to lay off employees
On Wednesday, Cisco Systems Inc announced plans of lowering its headcount by about 5.0% as well.The networking hardware company had a workforce comprising 85,000 in July of 2023 – which means around 4,250 of its employees are expected to lose jobs.
“Mounting Tech Layoffs Replaced by AI” @FoxBusiness #tech pic.twitter.com/qCkZdIe3Od
— Heather Zumarraga (@HeatherZuma) February 8, 2024
Other notable figures in its earnings release today include $24.7 billion of annualised recurring revenue (ARR) – up 6.0%. $CSCO ended the quarter with $35.7 billion worth of remaining performance obligations (RPO) – up 12% versus last year.Note that artificial intelligence is expected to result in 170 million layoffs in 2024 as Invezz reported . Wall Street currently has a consensus “hold” rating on Cisco Systems.More By This Author:Bitcoin Approaches $52k, Surpasses Tesla With $1T Market Cap Cathie Wood Loads Up On Shares Of Archer Aviation Inc Nikola Stock Price Analysis: Time To Be Contrarian?
