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Cisco's moves to software not reaping benefits

by on17 May 2018

But it is still making a killing

Cisco reported third quarter profit and revenue that beat the cocaine nose jobs of Wall Street’s estimates on Wednesday, but shares fell four percent after bleak current quarter forecasts indicated that the transition to a software focused business was not happening yet.

Cisco’s shares had climbed 18 percent and is the second biggest gainer among Dow components this year as investors bet on the company’s turnaround under Chief Executive Officer Chuck Robbins.

Robbins has been moving the outfit away from its traditional business of supplying switches and routers and into newer growth areas such as cloud, Internet of things and cybersecurity.

Revenue in the company’s closely watched security business, which offers firewall protection and breach detection systems, rose 11 percent to $583 million in the third quarter.

Cisco’s revenue from its services business missed estimates.

Revenue from the business, which provides technical and internet network support, rose 3 percent to $3.16 billion but fell short of the estimate of $3.24 billion

Robbins in a post-earnings call said he was confident about the transition.

“The business model transition that we have been giving metrics on since I became the CEO continue to move in the right direction”, he said.

Cisco forecast fourth quarter profit of 68 cents to 70 cents per share, while analysts were expecting 69 cents.

The company expects revenue growth of four percent to six percent from a year earlier, which implies a range of between $12.62 billion and $12.86 billion. Analysts were expecting revenue of $12.73 billion.

Net income rose to $2.69 billion in the third quarter ended April 28, from $2.52 billion a year earlier.

Total revenue rose 4.4 percent to $12.46 billion. Analysts, on average, had expected revenue of $12.43 billion.

Last modified on 17 May 2018
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