Cisco Systems Earnings: Investors Reward A Profitable Turnaround

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S&P 500 (NYSE:SPY) component Cisco Systems Inc. (NASDAQ:CSCO) reported net income above Wall Street’s expectations for the first quarter. Cisco Systems is a multinational corporation engaged in the design, manufacturing, and sales of Internet Protocol-based consumer electronics, networking, and other services related to communications and information technology.

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Cisco Systems Inc. Earnings Cheat Sheet

Results: Net income for Cisco Systems Inc. rose to $2.09 billion (39 cents per share) vs. $1.78 billion (33 cents per share) in the same quarter a year earlier. This marks a rise of 17.7% from the year-earlier quarter.

Revenue: Rose 5.5% to $11.88 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Cisco Systems Inc. reported adjusted net income of 48 cents per share. By that measure, the company beat the mean estimate of 41 cents per share. It beat the average revenue estimate of $11.58 billion.

Quoting Management: “We delivered record results this quarter — with revenue growth of six percent and strong earnings per share growth — demonstrating our vision and strategy are working,” said John Chambers, chairman and chief executive officer, Cisco. “Our innovation engine, operational discipline and on-going evolution are enabling us to differentiate in the market.” Chambers continued, “Cisco is at the center of the major market transitions — cloud, mobility, video — and yet we believe the largest market transition lies ahead of us, as the Internet of Everything becomes a reality. Cisco has the unique ability to turn information that will flow across networks into new capabilities and richer experiences. The Internet of Everything will create unprecedented possibilities for businesses, individuals and countries, and Cisco is poised to lead and fully maximize the opportunities of this evolution.”

Key Stats:

The company has now seen its net income rise for three quarters in a row. In the fourth quarter of the last fiscal year, net income rose 55.6% and in the third quarter of the last fiscal year, the figure rose 19.8%.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 2 cents in the fourth quarter of the last fiscal year, by one cent in the third quarter of the last fiscal year, and by 5 cents in the second quarter of the last fiscal year.

Revenue has increased for four quarters in a row. Revenue increased 4.4% to $11.69 billion in the fourth quarter of the last fiscal year. The figure rose 6.6% in the third quarter of the last fiscal year from the year earlier and climbed 10.8% in the second quarter of the last fiscal year from the year-ago quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from 43 cents a share to 42 cents over the last thirty days. Over the past three months, the average estimate for the fiscal year has climbed from $1.70 per to share to $1.72.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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