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Shares of Cisco (CSCO)  tumbled as the networking giant topped forecasts for the third fiscal quarter but reported weaker-than-expected guidance for the fourth quarter. 

Cisco earned 60 cents per share, exceeding Wall Street expectations of 58 cents per share, according to FactSet. Revenues of $11.94 billion topped forecasts of $11.89 billion in sales.

The stock dropped more than 5% to $32 per share after hours, as the company reported that it expects fiscal Q4 revenue to be down 4% to 6% from the prior year, compared to consensus estimates for revenue to be down 1% to $12.52 billion. EPS guidance of $0.60 to $0.62 compared with a $0.62 consensus.

During Wednesday's trading session, which was the worst for stocks this year, Cisco declined 1.4% to $33.82.

Revenues declined by 1%, with Asia dropping by 2% and the Americas, Europe, Middle East and Africa flat. Revenues from Cisco's largest business, switching, grew 2% to nearly $3.5 billion.

Wireless products were the biggest gainers, increasing by 13% to $703 million, while security increased 9% to $527 million. The biggest declines came in video products, which dropped 30%. NGN Routing, Collaboration, Data Center, and Service Provider Video revenue decreased by 2%, 4%, 5%, and 30%, respectively.

Recurring revenue made up 31% of sales, an increase of two percentage points from the prior year.

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Cisco wants to continue to drive that figure higher, however. "We will continue to invest in growth areas as we move the business toward more software and recurring revenue and return value to shareholders," CFO Kelly Kramer said in a statement.

Cisco may have more resources to invest in software and other growth businesses if the government enacts tax cuts. The House Ways and Means Committee holds a hearing on tax reform Thursday, and Trump has voiced support for a tax holiday on overseas cash and other breaks.

Cisco's cash and equivalent investments declined to $68 billion, from $71.8 billion at the end of the second fiscal quarter. All but $2.9 billion of that cash is outside the U.S.

Cisco could boost its capital return program by $30 billion over five years, and still have $20 billion for M&A, Credit Suisse suggests. 

The company announced three acquisitions in May. Cisco is buying San Francisco artificial intelligence company MindMeld for $125 million to develop chat and voice interfaces; the advanced analytics unit of tech services company Saggezza for an undisclosed sum; and software networking company Viptella for $610 million.

Jim Cramer and the AAP team, which owns Cisco, highlighted Cisco's makeover in their coverage of the stock. "Recall that a focal point of the [Cisco] investment thesis continues to be management's ability to spot attractive assets in the higher-growth and higher-margin software and security spaces, both of which are driving [Cisco]'s transformation for the long term," they said. Get a free trial subscription to Action Alerts PLUS.

Updated from 4:18 p.m. with additional information.