CSCO Cisco Systems Inc

By Maria Armental 

Cisco Systems Inc., the networking-equipment giant, projected its first quarterly revenue decline in more than two years, blaming what it called a pause in customer spending.

The company, considered a proxy for corporate high-tech hardware demand, expects revenue to fall 3% to 5% this quarter. Analysts polled by FactSet were expecting revenue to increase by about 2.4% to $12.75 billion.

Chief Executive Chuck Robbins said during a conference call with analysts that the weakness the company saw in the fourth quarter carried into the first quarter and was more pronounced and broad-based than the company initially thought.

"We've effectively assumed that it will stay as is," he said. "We haven't modeled any material further deterioration or improvement, I think, in what we've put forward today."

Shares dropped 4.8% to $46.13 in Wednesday's after-hours trading.

Cisco's first-quarter revenue rose 0.7% to $13.16 billion, beating analysts' projections and at the low end of Cisco's projection of flat to up 2%.

At Cisco's core business, selling switches, routers and other networking equipment to businesses, revenue fell 1% to $7.54 billion, shy of analysts' forecasts.

Revenue from Cisco's applications business, which includes videoconferencing and other products, rose 6% to $1.5 billion, just above analysts' projections, and revenue in its small but fast-growing security segment rose 22% to $815 million, well ahead of analysts' projections.

Cisco reported first-quarter profit fell 18% to $2.93 billion, or 68 cents a share. On an adjusted basis, profit rose to 84 cents a share from 75 cents a share a year earlier.

Analysts expected adjusted earnings of 81 cents a share.

For the current quarter, the company expects adjusted earnings between 75 cents and 77 cents a share. Analysts projected 79 cents a share.

Cisco said it still expects to wrap up during the second half of the current business year the acquisition of Acacia Communications Inc. The deal requires approval in China.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

November 13, 2019 18:31 ET (23:31 GMT)

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