By Jon Swartz
Cisco Systems Inc.’s stock slipped 6% in extended trading Wednesday after the computer-networking company reported fiscal first-quarter results slightly above Wall Street estimates but offered tepid guidance because of lingering supply-chain issues.
Cisco /zigman2/quotes/209509471/composite CSCO -0.23% reported net income of $3 billion, or 70 cents a share, compared with net income of $2.2 billion, or 51 cents a share, in the year-ago quarter. The company’s adjusted net income was $3.5 million, or 82 cents a share.
Revenue climbed 8% to $12.9 billion, from $11.9 billion a year ago. Analysts surveyed by FactSet had expected earnings of 80 cents and revenue of $12.98 billion.
The company expects 64 cents to 68 cents a share in profit, or 80 cents to 82 cents on an adjusted basis, in the fiscal second quarter. Analysts were forecasting 70 cents and 82 cents, respectively, according to FactSet.
Cisco, like most major tech component suppliers, is coping with supply chain issues that have partially offset strong enterprise sales. The conflicting dynamic was at the heart of many analysts’ notes heading into Monday’s repot.
“There were so many things that went well in the quarter,” Cisco Chief Financial Officer Scott Herren told MarketWatch in a phone interview, noting a 33% jump in product order growth rate from a year ago, a 21% rise in annualized revenue run-rate, and strong demand across all sectors and geographies.
“But we couldn’t convert the demand into revenue, at least during the 90-day cycle” because of supply-chain issues that limited access to parts like semiconductors, power supplies and memory, as well as logistic snarls, he added.
“All that backlog and ARR will eventually become revenue,” Herren said.
Secure, Agile sales ($5.97 billion, up 10% year-over-year), Services revenue ($3.4 billion, up 1%), and Internet for the Future ($1.38 billion, up 46%) led in revenue categories.
The quarter marked the first time Cisco broke out product and service revenue into seven new categories: Secure, Agile Networks; Hybrid Work; End-to-End Security; Internet for the Future; Optimized Application Experiences; Other Products; and Services.
Cisco’s stock is up 27% so far in 2021, while the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.56% , which counts Cisco as a component, has advanced 17%. The broader S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.08% has increased 25% this year.