CSCO Stock: Cisco Earnings Top Estimates Amid Restructuring Plan

Cisco Systems ( CSCO ) reported fiscal first-quarter earnings and revenue above consensus estimates. CSCO shares rose Thursday after the computer networking giant also announced a restructuring plan.




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The company reported earnings after the market closed on Wednesday. Cisco’s earnings for the quarter ended Oct. 29 rose 5% year over year to 86 cents per share, beating Wall Street’s target. The company said revenue rose 6% to $13.6 billion.

Analysts polled by FactSet had estimated earnings of 84 cents for Cisco on revenue of $13.31 billion.

For the current quarter ending January, Cisco said it expects earnings of 85 cents per share, based on estimates. Cisco forecast revenue growth of 5.5% at the midpoint of its guidance, above estimates for sales growth of 4%.

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CSCO Stock: Restructuring Plan Announced

In addition, Cisco announced a restructuring plan. The company said it will recognize a tax charge of about $600 million and a charge consisting of one-time severance benefits, real estate-related charges and other costs. Cisco expects to recognize about $300 million in fiscal Q2.

“Results were slightly better than expected, mainly due to a reduction in backlog and an environment that is holding up quite well,” Bank of America analyst Tal Liani said in a report. “Gross margin is expected to improve and the company announced restructuring. Revenue and EPS were up $300 million and 2 cents, respectively, and raised 2023 guidance by roughly the beat factor of Q1.”

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Cisco shares rose 3.1% to 45.79 in early morning trading.

Going into Cisco’s earnings report, the company had a relative strength rating of 42 out of a possible 99, according to IBD Stock Checkup. CSCO shares fell 30% in 2022.

In addition, CSCO shares have diverged from its core business of selling network switches and routers. With the acquisitions, Cisco aims to increase revenue from software and services.

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

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