Shares of Cisco Systems Inc. (CSCO - Get Report) were falling 2.2% to $31.61 in after-hours trading on Wednesday after the networking giant posted better-than-expected revenue for its fiscal fourth quarter, but said sales continued to decline year-over-year.
Revenue slid 4% year-over-year, marking the company's seventh-straight quarter of year-over-year sales declines. The company still managed to exceed Wall Street's expectations, however, with sales of $12.13 billion, which was higher than analysts' expected $12.07 billion. Adjusted earnings fell 3% from one year ago to 61 cents per share, which matched analysts' estimates.
The company also said it expects sales to continue a downward slide in the fiscal first quarter of 2018. Revenue is projected to fall between 1% and 3% year-over-year, while the company expects to report first-quarter earnings per share between 59 cents and 61 cents. Analysts are looking for earnings of 60 cents per share and $12.06 billion in revenue.
Sales in Cisco's core switching and routing businesses declined for the seventh-straight quarter. Both businesses slumped 9% year-over-year, while sales in Cisco's data center and collaboration units declined 4% and 2% year-over-year, respectively.
Meanwhile, the company's newer areas of focus continue to see growth. Wireless revenue climbed 5% year-over-year and sales in its security business jumped 9% year-over-year.
Cisco is undergoing a major shift towards subscription services and other recurring revenue streams as its legacy networking and switching businesses continue to lag. Deutsche Bank analysts recently estimated that recurring revenues could make up about 40% of the company's top line by 2020.
Cisco's security business remains another bright spot, helped recently from customer spending following the string of ransomware attacks. The company has been able to grow its software business rapidly, in part, due to a recent string of acquisitions in the space, including Viptela and AppDynamics, among others.
Cisco previously guided for year-over-year revenue declines in its fiscal third-quarter results, warning that sales would fall between 4% and 6% from the year-ago period. It attributed the slump to weak product orders in its public sector business, particularly those that came from the federal government.
During the earnings call scheduled for late Wednesday, analysts will likely ask about the health of Cisco's public sector orders, which have fallen due to uncertainty about department budgets, as well as service provider orders in Mexico, which fell 49% year-over-year in the third period as a result of President Donald Trump's rocky relations with the country.
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