Cisco shares jumped in extended-hours trading Wednesday after the network equipment maker topped quarterly forecasts and handed in better-than-expected revenue guidance.
The company posted earnings of 51 cents a share, excluding one-time items, on sales of $11.55 billion. Analysts had expected the company to report earnings excluding items of 48 cents a share on $11.36 billion in revenue, according to a consensus estimate from Thomson Reuters.
In addition, the company said it expects to see a 1 to 3 percent revenue decline in the fourth quarter, versus expectations for a 5-percent drop. Cisco said it also expects to hand in between 51 cents a share and 53 cents a share, ex-items, versus estimates for 51 cents a share.
“I’m pleased with our performance in the third quarter, said John Chambers, chairman and CEO of Cisco in a press release. “Our financial results exceeded the guidance we provided last quarter as we demonstrated clear progress on returning to growth. The entire team is focused on moving Cisco forward aggressively and we remain confident in our long-term goal to be the No. 1 IT company.”
Shares rallied in extended-hours trading. (Click here to get the latest quotes.)
Cisco increased its cash dividend in the third quarter to 19 cents a share.
“They increased dividends for a third year in a row. It shows Cisco has become a dividend-driven stock and not a growth stock, due to the fact that quarter over quarter they have not seen a lot of change in growth,” said Zeus Kerravalla at ZK research. “Growth has to come with macro changes and not with share gains, and that is something that has been difficult for them to deal with.”
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Last year, the company signaled that it expected business to slow and said it was looking to cut nearly 4,000 jobs, or almost 5 percent of its workforce.
Earlier this year, Cisco said it plans to spend $1 billion over the next two years to build data centers that will help to run Cisco Cloud Services, a new venture it hopes will help it compete in the growing cloud computing industry.
Most recently, Cisco revealed that some networking products were affected by ‘Heartbleed’, a bug that could potentially allow hackers to capture users’ personal data.