: Cisco stock falls after earnings as services revenue comes in light

Cisco Systems Inc. shares fell in the extended session Wednesday after services revenue at the networking giant fell short of Wall Street expectations even as other measures topped consensus views.

Cisco CSCO, -0.70%  shares fell 4.3% after hours, following a 0.7% decline to close at $45.16 in the regular session. At Thursday’s close, Cisco shares were up nearly 18% for the year, compared with a 0.2% gain for the Dow Jones Industrial Average DJIA, +0.25% which counts Cisco as a component.

The company reported fiscal third-quarter net income of $2.69 billion, or 56 cents a share, compared with $2.52 billion, or 50 cents a share, in the year-ago period. Adjusted earnings were 66 cents a share, the high end of Cisco’s estimate. Cisco on average was expected to post adjusted earnings of 65 cents a share. Estimize, a software platform that uses crowdsourcing from hedge-fund executives, brokerages, buy-side analysts and others, called for earnings of 66 cents a share.

In a note after the earnings report, GBH Insights analyst Daniel Ives said, “the Street was looking for more this quarter and thus could see a negative knee jerk reaction in shares accordingly.”

Revenue rose to $12.46 billion from $11.94 billion in the year-ago period. Wall Street expected revenue of $12.43 billion from Cisco. The company had predicted revenue of $12.3 billion to $12.54 billion, and Estimize expected revenue of $12.47 billion.

Read: Cisco earnings: Focus is on new networking-as-a-service model

What fell short of Wall Street expectations, however, was Cisco’s services revenue. Cisco reported a 3% rise to $3.16 billion, while Wall Street was expecting a 5.5% rise to $3.22 billion from a year ago.

Otherwise, the company topped consensus expectations. Cisco reported a 2% rise in infrastructure platform revenue to $7.16 billion while analysts expected $7.15 billion. Applications revenue rose 19% to $1.31 billion, compared with the Wall Street estimate of $1.25 billion. Security revenue rose 11% to $583 million while the Street was expecting $573.3 million in security revenue.

Cisco’s outlook range, however, bookended the Wall Street consensus. For the fourth quarter, Cisco estimates adjusted earnings of 68 cents to 70 cents a share on revenue of $12.62 billion to $12.86 billion. Analysts expect earnings of 69 cents a share on revenue of $12.72 billion.

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