Cisco Systems Inc. (CSCO) - Get Report shares traded sharply lower Thursday after the networking equipment maker posted stronger-than-expected first quarter earnings but said uncertain conditions would hit client orders in the months ahead.  

Cisco said earnings for the three months ending in September, the group's fiscal first quarter, came in at 84 cents per share, up 12% from the same period last year and four cents ahead of the Street consensus forecast. Group revenues also surprised, rising 1% to $13.2 billion and topping analysts' estimates of a $13.08 billion tally.

However, Cisco provided current-quarter guidance that miss Wall Street forecasts, with an earnings estimate in the region of 75 cents to 77 cents per share on implied revenues of between $11.8 billion and $12.1 billion are orders declined in what CEO Chuck Robbins called "a challenging macro environment."

Real Money: Cisco's Soft Guidance Comes Amid Macro Pressures and IT Spending Shifts

"Over the last year, many of you have heard me talk about the resilience of the global macro environment," Robbins told investors on a conference call late Wednesday. "However, on our last earnings call, we indicated that we had begun to see some weakness and that weakness continued throughout Q1 and was more broad based."

"While the main challenges continue to be service provider and emerging markets, this quarter we also saw relative weakness in enterprise and commercial," he added. "Despite these headwinds and because of key decisions we made four years ago to change our business model, we remain well positioned to capitalize on the tremendous opportunities across cloud, automation, 5G, security, and collaboration."

Cisco shares were marked 5..9% lower in at the start of trading Thursday to change hands at $45.63 each, a move that wipes out nearly all of the stock's year to date gains and value the San Jose, California-based group at around $193 billion.

"The major headline was a broad-based weakening of demand (inclusive of Enterprise/Commercial) that led to a significant setback in guidance for (the second quarter)," said KeyBanc Capital Markets analyst Alex Kurtz, who lowered his price target by $2 to $52 per share with an overweight rating. "While macro appears increasingly unsettled, core thesis drivers (9K, software) are trending in the right direction."