Cisco Systems, Inc. (CSCO) Shares Fall Post Weaker Forecast, Reports Better First Quarter 2015 Results

The shares of Cisco Systems, Inc. (NASDAQ:CSCO) rallied down in access of 1.6% after the network equipment manufacturer posted a weaker forecast for the current quarter. The lower forecast came after weaker sales in its emerging markets and major capital spending cuts by telecom service providers.

Cisco Systems announced its first quarter 2015 results with the highest first quarter revenue ever reported at $12.2 billion along with net GAAP income of $1.8 billion, which was lower than the net income of $2.0 billion during the same period last year. Non-GAAP income during the quarter was $2.8 billion and the networking equipment manufacturer spent $1.0 billion under its share repurchase program.

While talking about the lower than expected forecast for the current quarter, John Chambers, Chief Executive, said,

“Service provider is the big challenge…that’s due to two to three U.S. service providers who have dramatically slowed the order rates with us.”

Some of the major budget reformations were visible in the capital spending of AT&T Inc. (NYSE:T), as the company reduced its capital spending to $18 billion as compared to the earlier target of $21 billion. At the same time, the sales of the networking company fell nearly one-third in China during the first quarter.


While talking about the first quarter results, Chambers said,

“We continue to make progress towards becoming the #1 IT company in the world. We are still in a tough environment, but seeing encouraging trends as cities, businesses, governments and schools are becoming more digitized. Our solutions continue to drive positive outcomes and enable productivity through the combination of collaboration, mobility, security and efficiency across our customers’ businesses.”

For the second quarter ending in January, the company is expecting revenue growth of 4 to 7 percent with adjusted profits of $0.50 to $0.52 during the quarter.

This article has been written by Prakash Pandey.

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