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Cisco Stock Falls As Guidance Disappoints Amid Expectations for Post-Covid Rebound

Cisco Systems (CSCO) reported adjusted earnings and revenue for its fiscal second quarter of 2021 that topped analyst estimates. Cisco stock fell in extended trading on Tuesday as company profit guidance for the current April quarter met expectations.




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In the quarter ended Jan. 23, Cisco earnings rose 2% to 79 cents a share from a year earlier, the company said. Revenue came in at $12 billion, nearly flat versus the year earlier period.

With corporate spending on network infrastructure slowing amid a shift to remote work during the coronavirus emergency, analysts say the big question is whether Cisco can gain traction in cloud computing data centers. In that market, Arista Networks (ANET) is Cisco’s main rival.

A year earlier, Cisco earnings were 77 cents a share on sales of $12.01 billion. Analysts had expected Cisco earnings of 76 cents on sales of $11.92 billion.

Cisco stock fell 3.5% to 46.65 in extended trading on the stock market today.

Cisco Earnings Guidance Meets Expectations

For the current April quarter, Cisco earnings are expected to be 81 cents at the midpoint of its guidance, in line with estimates. Cisco expects revenue to climb 4.5%. Analysts had projected that revenue would rise about 3% to $12.36 billion.

However, Cisco’s third quarter of 2021 will have 14 weeks compared to 13 weeks for the same quarter in fiscal 2020. In a release, Cisco said that is “reflected in the guidance.”

From a technical view, Cisco stock has formed a handle with an entry point of 46.56. Cisco stock lagged the S&P 500 in 2020. However, Cisco stock has clawed back from a low of 35.28 on Oct. 29 amid a market rotation to value stocks.

Cisco stock owned a Relative Strength Rating of only 37 out of a possible 99 heading into the Cisco earnings report, according to IBD Stock Checkup.

In addition, Cisco 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.

Dividend-paying Cisco stock remains one of the top U.S. tech companies in terms of cash on its balance sheet. However, Cisco’s stock buybacks have slowed.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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