Cisco Beats, Street Bails

The Internet equipment giant posted solid fiscal third-quarter numbers, but investors were skittish over European financial concerns.
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Updated from Wednesday, May 12, with Thursday's premarket prices.

NEW YORK, (

TheStreet

) --

Cisco

(CSCO) - Get Report

beat, raised and was trading lower in premarket trading Thursday as investors failed to be blown away by the tentative recovery story.

After declaring that Cisco had turned a corner and was "hitting on all cylinders," Cisco chief John Chambers called for July quarter sales to grow 25% to 28% above year-ago levels. The guidance translates to revenue in the range of $10.6 billion and $10.88 billion. Analysts were looking for sales of $10.68 billion.

Cisco shares gave up all their gains on the day, closing up 3% during regular trading Wednesday at $26.74. The stock fell to $26.22 in premarket trading Thursday as investors turned cautious on the company's prospects.

Cisco posted adjusted earnings, excluding one-time items, of 42 cents a share, up from the 30 cents in the year-ago period and better than analysts' estimates calling for a pro forma profit of 39 cents a share, according to Thomson First Call.

Sales for the company's fiscal third quarter ended last month grew 27% to $10.4 billion, handily beating analysts' expectations for $10.2 billion in sales.

"Our financial results were outstanding, achieving record level revenue and earnings per share results," Chambers said in a press release, adding that the growth in the quarter was at a level "that we haven't seen since before the global economic challenges began."

The closely-watched GAAP gross margins narrowed to 63.9% from the 65% level last year; this dip was narrower than analysts' forecasts for 64.9% margins.

--Reported by Scott Moritz in New York

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