Cisco’s net profit for the third quarter ended March fell 6.67 percent to $2.8 billion and revenue fell 8 percent to $12 billion. Cisco reported third-quarter net income of 69 cents per share, or 65 cents per share, from $3 billion, or 69 cents per share, a year earlier. Revenue fell 8 percent to $12 billion, in line with Wall Street expectations. Excluding specific items, third-quarter earnings per share were 79 cents, better than analysts had expected.
Third-quarter revenue from its hardware business was $6.43 billion, down 15 percent from a year earlier. Sales of its software division applications fell 5 percent to $1.36 billion, while security revenue rose 6 percent to $776 million.
On the Nasdaq on Wednesday, Cisco shares fell $1.27, or 2.94 percent, to $41.95. But in after-hours trading, the stock rose $1.04, or 2.48 percent, to $42.99.
Cisco Systems gave a better-than-expected sales forecast for the fourth quarter of the fiscal year as demand for remote work and Internet devices increased.
Cisco on Wednesday forecast fourth-quarter revenue to fall between 8.5 percent and 11.5 percent year-on-year. If the decline is taken into the mid-range, fourth-quarter revenue will be about $12 billion, slightly above analysts’ expectations. Adjusted fourth-quarter profit was 72 cents to 74 cents per share, according to Bloomberg data, which was also higher than analysts’ forecasts.
Chuck Robbins, Cisco’s chief executive, said, “The current outbreak is driving the digitalization of businesses around the world and supporting remote work at unprecedented speed and scale.” “
Increased spending on data centers, servers, and other equipment to support employees who have been blocked from working online from home because of the outbreak. As a provider of computer network switches and other network equipment, Cisco benefits from this current situation. The company also said the use of its Webex video conferencing service had surged. But the recession has begun, limiting spending on technology costs for businesses and governments.
On a earnings conference call, Robbins, responding to a question about whether a further slowdown in the economy would cause the company’s orders to fall again, said he thought that had happened. He added that consumers in some industries, such as tourism and leisure, have stopped spending. But in some areas, the crisis is also spurring investment to upgrade network infrastructure.
Robbins told employees that their jobs were safe. He also urged other companies to avoid layoffs.
Cisco said in mid-April that it would provide $2.5 billion in funding to customers to encourage them to continue to purchase equipment during the Covid-19 outbreak. At the same time, payment deferred treatment is granted to buyers of Cisco equipment, services, and software.