Cisco Systems (CSCO) reported fiscal first-quarter earnings and revenue that topped consensus estimates. CSCO stock rose on Thursday as the computer networking giant also announced a restructuring plan.
The company reported earnings after the market close on Wednesday. Cisco earnings for the quarter ended Oct. 29 rose 5% year over year to 86 cents a share, topping Wall Street’s target. The company said revenue increased 6% to $13.6 billion.
Analysts polled by FactSet had estimated Cisco earnings of 84 cents a share on revenue of $13.31 billion.
For the current January-ending quarter, Cisco said it expects profit of 85 cents a share, in line with estimates. Cisco projected revenue growth of 5.5% at the midpoint of its guidance, above estimates for 4% sales growth.
CSCO Stock: Restructuring Plan Announced
In addition, Cisco announced a restructuring plan. The company said it will recognize pretax charges of about $600 million consisting of severance and other one-time termination benefits, real estate-related charges and other costs. Cisco expects to recognize about $300 million of the charges in fiscal Q2.
“Results were slightly better than expected, mainly a function of backlog drawdown and an environment that is holding up relatively well,” said Bank of America analyst Tal Liani in a report. “Gross margin is expected to improve and the company announced restructuring. Revenue and EPS beat by $300 million and 2 cents, respectively, and fiscal 2023 guidance was raised roughly by Q1’s beat factor.”
Cisco stock rose 3.1% to 45.79 in morning trading on the stock market today.
Heading into the Cisco earnings report, the company owned a Relative Strength Rating of 42 out of a best-possible 99, according to IBD Stock Checkup. CSCO stock had declined 30% in 2022.
In addition, CSCO stock has shifted away from its core business of selling network switches and routers. With acquisitions, Cisco has aimed to increase revenue from software and services.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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