Cisco beats profit estimates, adds $15 billion to buyback
CHICAGO – Network equipment maker Cisco Systems Inc reported a bigger-than-expected quarterly profit, helped by higher demand for its routers and security products, and added $15 billion (10 billion pounds) to its share buyback program.
The company’s shares rose 5.1 percent in after-market trading on Wednesday.
The results were a bright sign for investors after several tech stocks with lofty valuations plunged in the past few days due to disappointing sales outlooks from LinkedIn Corp and Tableau Software.
Cisco is shifting to high-end switches and routers and investing in new products such as data analytics software and cloud-based tools for data centers.
Revenue in the company’s routers business rose 5 percent to $1.85 billion in the second quarter ended Jan. 23, Cisco said.
Revenue in the switches business, the company’s biggest, fell 4 percent to $3.48 billion. Its security business, which offers firewall protection as well as intrusion detection and prevention systems, recorded an 11 percent rise in revenue to $462 million.
Cisco boosted its current share buyback plan of $97 billion, of which $16.9 billion was remaining, by $15 billion.
The company forecast third-quarter adjusted profit of 54-56 cents per share and revenue growth of 1-4 percent, excluding revenue from its customer premises equipment business, which it has sold.
Analysts on average expect a third-quarter profit of 55 cents per share and revenue of $12.02 billion. Net income rose to $3.1 billion, or 62 cents per share, from $2.40 billion, or 46 cents per share, a year earlier.
Excluding items, the company earned 57 cents per share, beating the average analyst estimate of 54 cents per share, according to Thomson Reuters I/B/E/S. Revenue rose 2 percent to $11.8 billion, excluding revenue from the customer premises equipment portion of the service provider video connected devices business that was divested. -Reuters