Chuck Robbins, CEO & President of Cisco, at WEF in Davos, Switzerland on May 25, 2022.
Adam Galica | CNBC
Cisco shares rose about 6% on Thursday and headed for their best day in nearly two years after the computer networking company reported better-than-expected quarterly results and give pink guidance for next year.
Revenue fell slightly in the fiscal fourth quarter from a year earlier to $13.1 billion, but still beat analysts’ average estimate of $12.79 billion, according to Refinitiv. Earnings per share were 83 cents, one cent higher.
Cisco has been struggling with supply chain constraints as a result of the Covid-related lockdown. Those problems finally began to abate in the most recent quarter.
Cisco CEO Chuck Robbins told CNBC’s “Squawk on the Street” on Thursday: “We’ve been told we have a record backlog, and when the supply chain starts to ease, we will start to see revenue flow through.” “We’ve seen some easing early in the supply chain, which is positive and we look ahead to next year and we feel it will continue.”
For fiscal year 2023, Cisco calls for revenue growth of between 4% and 6%, while analysts predict growth of just 2.3%. In fiscal year 2022, revenue grew 3.4%. Analysts at Needham were upbeat after the results.
“Cisco’s guidance primarily reflects the existing backlog and expectations of improving parts availability as well as improving price appreciation,” said Needham analysts, who have ratings. keep stock, write. “Improving supply is helping to beat estimates on the street.”
Cisco designs and sells a range of technologies that power the internet, and the company has struggled to thrive as the tech world shifts away from physical boxes and into cloud subscription software. Before Thursday’s rally, Cisco’s stock price was down 24% this year, while Nasdaq was down 17%.
Chief Financial Officer Scott Herren said in a release that the company’s revenue for the quarter reflected the strong implementation of Cisco’s initiatives to combat the “global supply situation”.
Analysts at Loop Capital said in a note Thursday that Cisco doesn’t see any signs of slowing demand, which reflects the value of network technology.
“Simply put, the network is becoming too important and we are in the midst of an unprecedented investment cycle in the network,” they wrote.
However, analysts at JMP say the supply chain will continue to cause problems for Cisco’s business.
“We believe supply chain constraints will limit growth for several quarters,” they wrote in a Thursday note.
