Earnings Results: Cisco stock rises as earnings, outlook top expectations

Cisco Systems Inc. shares rose in the extended session Wednesday after the network giant’s quarterly results topped Wall Street estimates.

Cisco CSCO, -0.81%  shares rose 2.8% after hours, following a 0.8% decline to close the regular session at $47.50. In comparison, the Dow Jones Industrial Average DJIA, +0.46% which counts Cisco as a component, rose 0.5%, the S&P 500 index SPX, +0.30%  gained 0.3%, and the tech-heavy Nasdaq Composite Index COMP, +0.08%  advanced less than 0.1%.

The networking company reported fiscal second-quarter net income of $2.82 billion, or 63 cents a share, compared with a loss of $8.78 billion, or $1.78 a share, in the year-ago period. Adjusted earnings were 73 cents a share. Of the 27 analysts surveyed by FactSet, Cisco on average was expected to post adjusted earnings of 72 cents a share for the second quarter. Cisco had forecast 71 cents to 73 cents a share.

Revenue rose to $12.45 billion from $11.89 billion in the year-ago quarter. Wall Street expected revenue of $12.42 billion from Cisco, according to 25 analysts polled by FactSet. Cisco had predicted revenue of $12.48 billion to $12.72 billion.

Total product revenue, which includes the family of Catalyst 9000 switches that are sold with a multiyear software subscription that gives the company a recurring revenue stream, rose 6% to $9.27 billion, while analysts were looking for $9.15 billion.

Of that, infrastructure platform revenue rose 6% to $7.13 billion versus the Street’s $7.07 billion view. Applications revenue surged 24% to $1.47 billion, while analysts had estimated $1.35 billion. Security revenue, which has been bolstered by the acquisition of Duo Security, grew 18% to $658 million versus the $629.2 million Street view.

Services revenue, however, came in at $3.17 billion just shy of the $3.25 billion expected by analysts.

For the third quarter, Cisco expects earnings of 76 cents to 78 cents a share on 4% to 6% year-over-year revenue growth, or $12.96 billion to $13.21 billion. Analysts estimate earnings of 76 cents a share on revenue of $12.84 billion.

Also, Cisco announced its board authorized a 6% quarterly dividend hike to 35 cents a share, and a $15 billion increase to the company’s share buyback program.

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