Cisco Drops 5% After Forecast Shows Revenue Decline Increasing

By Jeremy C. Owens Markets MarketWatch Pulse

Cisco Systems Inc. shares dropped in late trading Wednesday after the networking giant said revenue would decline at a faster rate in the current quarter. Cisco beat earnings estimates for its fiscal third quarter, reporting net income of $2.52 billion, or 50 cents a share, on sales of $11.94 billion. After adjusting for stock-based compensation and other effects, Cisco claimed earnings of 60 cents a share. Analysts on average expected adjusted earnings of 58 cents a share on sales of $11.9 billion, according to FactSet. The company said that revenue for the current quarter would decrease 4% to 6% year-over-year, however, after a 1% decline in the previous quarter. That suggests a revenue total of $11.9 billion to $12.1 billion, while analysts were forecasting a sales total of $12.5 billion on average, according to FactSet. Cisco said it expects adjusted earnings in a range of 60 cents to 62 cents a share for the current quarter, while analysts expect 62 cents a share on average. Cisco stock fell more than 5% in late trading after closing with a 1.4% decline at $33.83. Shares have gained 27.2% in the past year, while the S&P 500 index has increased 17.3% in that time.

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