The San Jose, Calif.-based networking company projected second-quarter earnings between 55 cents and 57 cents a share and expects revenue to decline 2% to 4% over last year, while Wall Street was expecting earnings of 59 cents per share and 1.8% year-over-year growth. For the fiscal first quarter, however, results beat analysts' expectations.
CEO Chuck Robbins said on the company's conference call that the cautious second-quarter guidance was due primarily to weakness in the company's service provider business, in which orders fell 12% annually in the past quarter.
Shares of Cisco were down 5.5% to $29.83 Thursday morning following the results.
Jim Cramer and Jack Mohr, who co-manage our Action Alerts PLUS investment club, cut AAP's rating on CSCO to a "Two" from a previous "One," writing in a note to club members that "Cisco's growth is contingent on far too many factors outside management's control." Click here for a free 14-day trial of Action Alerts PLUS and read their full analysis.
Still, Pacific Crest analysts Alex Kurtz and Steve Enders reiterated a "buy" rating and $33 price target on the stock Thursday morning. "Despite the setback in the U.S. service provider market, which appears unrelated to product or competitive positioning ... we would see any material pullback in the stock as a buying opportunity," Kurtz and Enders said in a note.