Cisco Selling Outlook Beats Estimates, But Profits Disappoint



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(Bloomberg) – Cisco Systems Inc., the world’s largest maker of computer networking equipment, gave optimistic forecasts for sales growth in the coming years, but disappointed analysts with its earnings projections.

Revenue will rise 5% to 7% over the next four fiscal years, the company told analysts and investors in a presentation Wednesday. It exceeded Wall Street forecasts. Earnings per share, excluding some items, will grow at about the same rate – and this is where the company has failed. Analysts were looking for greater efficiency to help profits grow faster than sales.

Cisco shares fell 0.5% to $ 57.56 in New York after the event. They are still up 29% this year.

CEO Chuck Robbins said Cisco will continue to invest in business opportunities, but grapples with higher component costs amid a global semiconductor shortage.

“It’s frustrating because we can’t deliver all the products our customers want,” he said in an interview. While these constraints will likely ease over the next year, Cisco will continue to invest money in projects that will drive long-term revenue growth, he said. This means putting less emphasis on earnings per share.

Robbins has strived to transform the mainstay of Silicon Valley into an Internet-delivered network service provider and software vendor, rather than just an equipment vendor. The company has traditionally generated most of its revenue from expensive switches and routers. that form the backbone of computer networks, but that is changing. Subscription revenue will reach 50% of Cisco’s total by fiscal 2025, the company predicted on Wednesday.

Wall Street expected revenue growth to peak at 6% in fiscal 2022 and then decelerate, according to data compiled by Bloomberg. But they had higher hopes for gains, with projected growth reaching 9% per year by 2025.

Executives at the San Jose, Calif., Based company said Cisco benefits from working from home. Businesses are rushing to upgrade their hardware and software to keep up with the change. And they’re adding security and shifting workloads to cloud service providers, a market Cisco is now increasingly serving with new products.

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