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