SAN FRANCISCO (dpa-AFX) - Cisco Systems, Inc. (CSCO), the world's largest computer networking gear maker, said Wednesday after the markets closed that its third quarter profit fell 12% from last year, as revenue dropped 5.5%.
However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.
'I'm pleased with our performance in Q3. Our financial results exceeded the guidance we provided last quarter as we demonstrated clear progress on returning to growth,' said John Chambers, Cisco chairman and chief executive officer.
Cisco shares are currently gaining 6.80% in after hours trading after closing the day's regular trading session at $22.81, down 5 cents. The shares trade in a 52-week range of $20.22 to $26.49.
For the third quarter ended April 26, 2014, the San Jose, California-based company reported net income of $2.2 billion or $0.42 per share, compared to $2.5 billion or $0.46 per share for the year-ago quarter.
Excluding items, adjusted net income for the third quarter was $2.6 billion or $0.51 per share, compared to $2.7 billion or $0.51 per share in the prior year quarter.
On average, 37 analysts polled by Thomson Reuters expected the company to earn $0.48 per share for the third quarter. Analysts' estimates typically exclude special items.
This marks the third straight time in nine quarters that Cisco's profit has declined year over year. The company had been struggling with rising costs that threatened to derail its earnings growth. To reduce costs, Cisco cut thousands of jobs. In August, Cisco said it would cut 4,000 jobs, or 5% of its global workforce, to 'rebalance' its employee base.
Cisco, which makes the routers and switches that direct computer and telecommunications traffic over corporate networks and the Internet, said total revenue for the third quarter fell 5.5% to $11.55 billion from $12.22 billion in the same quarter last year. Thirty-six analysts had a consensus revenue estimate of $11.38 billion for the third quarter.
Product revenue for the quarter fell 7.7% to $8.8 billion, while services revenue for the quarter grew 2.6% to $2.7 billion.
During the third quarter, Cisco repurchased about 90 million shares of common stock for an aggregate purchase price of $2 billion. The remaining authorized amount for stock repurchases as of April 26 was about $10.1 billion with no termination date.
Cisco's balance sheet looked rock solid. The company ended the third quarter with cash and cash equivalents and investment of $50.5 billion, compared to $47.1 billion at the end of the prior quarter and $50.6 billion at the end of the fourth quarter of fiscal 2013.
Cisco is aggressively pursuing the acquisition-led growth strategy, diversifying its business and entering consumer markets. Cisco recently acquired WhipTail Technologies, Inc., Collaborate.com and Insieme Networks, Inc.
Cisco is viewed as a technology-industry bellwether because it dominates the market for routers and switches. Since the company's latest results are for the full month of April, instead of March for many of the technology giants, they are also seen as an early indicator of industry trends.
Meanwhile, Cisco said it expects fourth quarter revenue to decline 1% to 3% and earnings to be $0.51 to $0.53 per share. Analysts currently expect the company to earn $0.51 per share on revenue decline of 5.20% for the fourth quarter.
In December, Cisco trimmed its long-term growth guidance for adjusted earnings and revenues over the next three to five years, citing the weakness in emerging markets and product transitions.
Juniper Networks, Inc. (JNPR), which competes with Cisco in the router industry, last month reported a 22% rise in first quarter profit, helped by higher revenue and a hefty gain from the sale of minority equity investments. The company's quarterly earnings per share, excluding items, came in line with analysts' expectations, but its quarterly revenue topped analysts' forecast. At the same time, the company gave an upbeat earnings guidance for the current quarter.
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