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Cisco revenue forecast disappoints amid software shift efforts

Cisco revenue forecast disappoints amid software shift efforts

The company said it expects revenue in the current quarter to drop by 3 per cent to 5 per cent

Credit: Cisco

Cisco has forecast second-quarter revenue and profit below estimates as the network gear maker struggles to shift to a software-focused company from its business of selling routers and switches, sending shares down 4 per cent.

Analysts have been worried about the impact of the US-China trade war on the company's sale of switches and routers, as some of these are made in China.

Cisco had said in the last quarter that US tariffs and Chinese customers shunning its network gear was hurting its business.

The company said it expects revenue in the current quarter to drop by 3 per cent to 5 per cent from a year earlier to between US$12.07 billion to US$11.82 billion. Analysts were expecting revenue of US$12.77 billion, according to IBES data from Refinitiv.

The company has been moving its focus to newer areas such as software and cyber security to counter slowing demand for its routers and switches as companies increasingly opt for cloud-based services offered by Amazon.com and Microsoft Corp.

Cisco expects profit on an adjusted basis to be between 75 cents and 77 cents (US) per share in the current quarter, below analysts' average estimate of 79 cents (US).

The gloomy outlook overshadowed first-quarter results, which beat expectations.

Total revenue in the quarter ended Oct. 26 rose nearly 1 per cent to US$13.16 billion, above expectations of US$13.09 billion.

Excluding items, Cisco earned 84 cents (US) per share and beat estimates of 81 cents (US).

(Reporting by Akanksha Rana in Bengaluru; Editing by Arun Koyyur)


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