"We're still expecting spending to be down in the mid-single digits" for the rest of the year, Kramer said in a phone interview. "There have been some reports that spending might pick up in the second half of the year, but we're not assuming that."
For the third quarter, Cisco earned an adjusted 54 cents a share on $12.1 billion in revenue as product revenue rose to $9.32 billion in the quarter, up from $8.82 billion in the year-ago quarter. Gross margins during the quarter were 62.5%, with product gross margins at 61.8%, up 40 basis points compared to a year ago.
Analysts surveyed by Thomson Reuters expected the company to earn an adjusted 53 cents a share on $12.06 billion in revenue.
For the upcoming quarter, Cisco said it expects revenue to rise between 1% and 2% year over year, with earnings between 55 cents and 57 cents a share. Analysts surveyed by Thomson Reuters expect the company to earn 56 cents a share on $12.65 billion in revenue.
On the earnings call, outgoing CEO John Chambers tried to end speculation the San Jose-based Cisco would acquire security company FireEye (FEYE); however, CFO Kramer stated Cisco is keeping an open mind on acquisitions, not just in security, but all areas, including software and cloud.
"We'll continue to be very acquisitive in the future," Kramer said, without mentioning any possible targets. "The security space is very interesting -- it's very fragmented and it's an area we'll always look to grow in, both organically as well as inorganically."