Cisco Systems Inc. (CSCO) shares fell in more than 4% Thursday morning after the company reported adjusted third-quarter earnings of 66 cents per share, topping analyst estimates by a penny.

Shares were down 3.7% to $43.48 early Thursday. Year to date, shares have risen almost 14%.

Revenue for the period rose 4% to $12.5 billion, just ahead of analysts' expectations of $12.43 billion. 

"We are executing well against our strategy, our innovation pipeline has never been stronger, and we continue to make great progress in transforming towards more software and subscriptions," said Chuck Robbins, Cisco's Chairman and CEO. "I am confident with our position in the industry and the impact we will continue to drive with our customers."

A squeezed product gross margin may be responsible for Wednesday afternoon's selloff as the company reported non-GAAP product gross margins of 62.9% vs. 63.2% last year. Operating expenses also rose 6% year over year, representing 32.5% of the company's revenue. 

Cisco said it expects its non-GAAP EPS to rise in the next quarter to between 68 cents and 70 cents per share. 

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