Cisco Systems Falls Sharply After Earnings Miss
Shares of Cisco Systems Inc. (NASDAQ:CSCO) fell sharply by 7.73% to $46.70 in after-hours trading Wednesday, after the company missed consensus estimates on fourth-quarter fiscal 2019 earnings per share by 22 cents.
Earnings per share were 51 cents, or a nearly 37% decrease from the prior-year quarter.
Revenues increased 4.6% to $13.4 billion, topping projections by $40 million. Excluding the Service Provider Video Software Solutions business, which the company divested in the second quarter of fiscal 2019, revenue increased 6%.
Revenue breakdown: Products went up 7% to $10.12 billion, and service was up 4% to $3.31 billion. Inside product revenues, the company reported a 14% gain in Security, 11% rise in Applications, and 6% rise in Infrastructure Platforms.
By geographic segment: Revenue in the Americas grew 9% and revenue in Europe, the Middle East and Africa was up 7%. In contrast, China, Japan and the greater Asia Pacific region decreased 4%. Moreover, net income of $2.2 billion dropped 42%.
For the first quarter of fiscal 2020, the company is guiding for revenue growth of 0% to 2% to a range of $13.1 billion to $13.36 billion versus expectations of $13.4 billion. Earnings per share are expected to be between 64 to 69 cents.
The San Jose, California-based international communication equipment distributor also reported data for full fiscal 2019. Earnings per share reached $2.61 on revenue of $51.7 billion, up 7% from full fiscal 2018.
In the fourth quarter of fiscal 2019, the company allocated $6 billion to share repurchases and dividends.
Cisco Systems bought back $4.5 billion of its own common stock at an average price of $54.99, withdrawing 82 million shares.
The company paid a 35-cent cash quarterly dividend per common share on July 24 to shareholders of record July 5, spending $1.5 billion.
Further, in the second part of fiscal 2019, the company expects to complete the acquisition of Acacia Communications Inc. (ACIA), a global developer, producer and seller of high-speed coherent optical interconnect products.
The stock has climbed 17% so far this year, and it closed at $50.6 per share Wednesday. The market capitalization is $216.65 billion.
The 52-week range is $40.25 to $58.26.
Wall Street issued an overweight recommendation rating for shares of Cisco Systems Inc. with an average target price of $58.68.
Disclosure: I have no positions in any securities mentioned.
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