Cisco Systems (NASDAQ: CSCO) shares nosedived in extended trading after the company lowered its full-year profit and revenue forecasts, signaling a potential slowdown in demand for its networking equipment.
Tech giant Cisco Systems, Inc. (NASDAQ: CSCO) has reported better-than-expected fiscal first-quarter earnings, with adjusted earnings of $1.11 per share, beating estimates of $1.03. The company also boasted a revenue of $14.67 billion, slightly above the expected $14.63 billion.
However, the company’s second-quarter and full-year revenue projections fell well below Wall Street expectations. The second-quarter outlook came in between $12.6 billion and $12.8 billion, compared to the $14.2 billion estimate. Cisco lowered its full-year revenue forecast to $53.8 billion-$55.0 billion, down from the previous estimate of $57 billion-$58.2 billion.
The downward revision in forecasts is attributed to an anticipated slowdown in capital spending by cloud computing and telecom customers in 2024. However, Cisco anticipates some resilience in corporate and government spending.
Cisco shares plummeted 16% in extended trading after the announcement. The stock did recover slightly but ended the after-hours session with an 11% decrease. The stock had shown a 12% increase in 2023, closing at $53.28 on Wednesday.
Cisco has been grappling with supply chain challenges and a post-pandemic demand slowdown, prompting the company to pivot towards software offerings like cybersecurity. In a strategic move in September, Cisco announced the acquisition of software company Splunk (NASDAQ: SPLK) for $28 billion in cash. The deal is expected to close within the next 9-12 months.