Chuck Robbins, Chief Executive Officer of Cisco Technologies Inc., paused during a panel session on day two of the World Economic Forum in Davos, Switzerland, on January 22, 2020.
Jason Alden | Bloomberg | Getty Images
Cisco shares fell about 6% in extended trading on Wednesday after the maker of computer networking equipment delivered a disappointing forecast. CEO Chuck Robbins told analysts during a conference call on Wednesday that the company’s chief financial officer, Kelly Kramer, will retire.
Here’s how the company performed in the fiscal fourth quarter:
- Earnings: 80 cents per share, adjusted, vs. 74 cents per share as expected by analysts, according to Refinitiv.
- Income: $ 12.15 billion, vs. $ 12.08 billion as expected by analysts, according to Refinitiv.
Revenue for the quarter fell 9% from a year earlier, according to a statement, the third straight quarterly drop. Purchases per share increased 22% as the company reduced corporate expenses by 9%.
While much of the technology sector is seeing growth as the economy moves online and more companies rely on software to run their businesses, Cisco is struggling to keep pace as its business has historically centered on expensive hardware. Major public cloud offerings from Amazon, Microsoft and Google have shattered demand for Cisco’s gear in recent years, and the company’s investments in software have not made up for the decline.
Some customers have accelerated their move to multi-cloud architecture, Robbins said at the conference call.
“While our results reflect the ongoing challenges in today’s environment, we have performed well,” he said. “As you would expect, the pandemic has had the greatest impact on our corporate and commercial orders, driven by a general slowdown in spending. We are seeing customers continue to make purchasing decisions in certain areas, while spending in others increases until they are larger. visibility and clarity on the timing and shape of the global economic recovery. “
The Infrastructure Platforms unit, which includes data center switches and routers, generated $ 6.63 billion in revenue, 16% down and above the $ 6.48 billion estimate among analysts surveyed by FactSet. The virus posed a challenge in that business, including for smaller businesses, Kramer said. Cisco saw growth in double-digit web-based customers serving large data centers for the third consecutive quarter, Robbins said.
Revenue from Cisco’s applications, including sales of Webex video conferencing software, totaled $ 1.36 billion, which was 9% and below the consensus estimate of $ 1.45 billion.
In the quarter, Cisco announced its intention to acquire network monitoring company ThousandEyes for approximately $ 1 billion and introduced new solutions for remote working and learning as the coronavirus pandemic continued.
The company expects first-quarter fiscal guidance from 69 cents to 71 cents in adjusted earnings per share and a 7% to 9% revenue drop. Analysts surveyed by Refinitiv had expected 76 cents in adjusted earnings per share and $ 12.25 billion in revenue for the quarter, which works up to a roughly decline of 7%. Cisco will cut $ 1 billion annually, Robbins said.
Kramer joined Cisco in 2012 during the tenure of Robbins’ predecessor John Chambers, and in 2015 she became the finance house company after two decades at GE. Kramer will continue until her replacement arrives, Robbins said.
As of Wednesday, Cisco shares were flat for the year, while the technology-heavy Nasdaq Composite Index was about 23%.
WATCH: Cisco CEO Chuck Robbins on serving a tech company during a pandemic
.
