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Alberto Abaterusso
Alberto Abaterusso
Articles (1615) 

Cisco Systems Falls Sharply After Earnings Miss

The company tops revenue projections, however

August 15, 2019 | About:

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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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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