Cisco Shares Drop On Weak Sales Outlook

Cisco projected for revenue to fall between 9% and 11% in the current quarter.

Cisco shares were down sharply in after-hours trading after the networking firm beat consensus forecasts for revenue, but issued a weak sales outlook. 

For its fiscal fourth quarter, which ended in July, Cisco reported $12.2 billion in revenue, down 9% year-over-year, and GAAP earnings of 62 cents per share, up 22%. Analysts polled by FactSet were expecting GAAP earnings of 65 cents on sales of $12.09 billion.

For the current quarter, Cisco's fiscal Q1 2021, the company guided for a 9% to 11% drop in revenue, and for adjusted earnings between 69 cents and 71 cents per share, below analyst consensus estimates for 75 cents a share. 

Cisco  (CSCO) - Get Cisco Systems, Inc. Report shares were down 6.7% to $44.90 in after hours trading. 

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"Throughout fiscal 2020, Cisco has demonstrated operational resilience based on our strong customer relationships, solid financial foundation, and differentiated innovation," said Cisco chairman and CEO Chuck Robbins in a statement. "As we focus on the future, we are rebalancing our R&D investments to focus on new areas so we can continue to offer customers the best, most relevant technology in simpler, more easily consumable ways."

Cisco, which sells networking-focused hardware, software and services, reported drops in revenue across several segments and all regions. Product revenue was down 13%, and service revenue was flat. Infrastructure Platforms revenue was down 16%, and Applications revenue was down 9%. Security revenue grew 10%.

By geographic segment, Americas revenue was down 12%, EMEA (Europe, Middle East and Africa) revenue was down 6%, and APJC (Asia-Pacific, Japan and China) revenue was down 7%.

Heading into earnings, Cisco shares were roughly flat year to date.