Cisco Tops Estimates But Gives Conservative Annual Forecast

Despite beating analysts' expectations for its fiscal second-quarter earnings, Cisco Systems Inc. gave a conservative annual forecast, citing concerns about the global economy. The networking giant reported earnings of 88 cents per share, excluding certain items, on revenue of $13.58 billion. Analysts had expected earnings of 86 cents per share on revenue of $13.49 billion, according to Refinitiv IBES.

Cisco's revenue grew 5% year-over-year, led by growth in its infrastructure platforms, security, and collaboration businesses. The company's software revenue also grew 12%, driven by demand for its subscription-based offerings.

Conservative Annual Forecast

Despite the strong quarterly results, Cisco gave a conservative annual forecast, citing concerns about the global economy. The company said it expects revenue to grow 4% to 6% in fiscal 2023, below the 5% to 7% growth it had previously forecast. Cisco also said it expects earnings per share to grow 3% to 5% in fiscal 2023, below the 4% to 6% growth it had previously forecast.

Cisco's conservative forecast is in line with the cautious outlook of other tech companies. Many companies are concerned about the impact of the war in Ukraine, rising inflation, and supply chain disruptions on their business.

Analysts' Reaction

Analysts were mixed in their reaction to Cisco's earnings report and annual forecast. Some analysts praised the company's strong quarterly results, while others expressed concern about the conservative annual forecast.

"Cisco's earnings report was a mixed bag," said Brad Reback, an analyst at Stifel. "The company beat expectations on both the top and bottom lines, but the annual forecast was disappointing." Reback said he is concerned about the impact of the global economy on Cisco's business.

"Cisco's conservative annual forecast is a sign that the company is taking a cautious approach to the future," said Tal Liani, an analyst at Bank of America. "The company is clearly concerned about the impact of the war in Ukraine, rising inflation, and supply chain disruptions on its business."

Conclusion

Cisco's earnings report and annual forecast were a mixed bag. The company beat expectations on both the top and bottom lines, but the annual forecast was disappointing. Analysts were mixed in their reaction to the report, with some praising the company's strong quarterly results and others expressing concern about the conservative annual forecast.