Cisco touts market share wins, AI potential as revenue forecast disappoints
Reuters
Published Aug 16, 2023 04:16PM ET
Updated Aug 16, 2023 06:36PM ET
(Reuters) -Networking equipment maker Cisco Systems (NASDAQ:CSCO)' CEO talked up market share wins and artificial intelligence (AI) opportunities, as he moved to allay fears over slowing growth after a disappointing annual revenue forecast.
The remarks helped the company's shares reverse course in extended trading to rise more than 2% on Wednesday. But the stock has underperformed a broader market rally this year with an 11% rise, dogged by worries that a cloud spending slowdown would hit orders.
Cisco forecast full-year revenue to be between $57 billion and $58.20 billion, below the Refinitiv estimate of $58.38 billion. Rival Juniper also offered a weak forecast last month.
But Cisco CEO Chuck Robbins said the company had gained more than 3 percentage points of market share in its three largest networking markets in the first quarter and expects more share gains in these areas.
He also said the company was likely to be a leading supplier of the networking gear needed for AI workloads. "This is a huge opportunity for Cisco."
Major cloud providers, including Microsoft (NASDAQ:MSFT), have recently unveiled plans to increase spending on servers that power AI services, in a potential boost for suppliers of networking hardware such as switches and routers.
Cisco, whose customers include telecom firm AT&T (NYSE:T) and auto retailer AutoNation (NYSE:AN), also reported fourth-quarter revenue of $15.20 billion, beating the estimate of $15.05 billion.
The company, benefiting from easing supply chain hurdles, has tried to reduce its dependence on one-time sales of expensive hardware by pushing more of its software services, which are more reliable as they bring in recurring payments.
Its quarterly adjusted profit was $1.14 per share, compared with analysts' expectations of $1.06 per share.
Cisco expects adjusted earnings per share of $4.01 to $4.08 for the full year, compared with the estimate of $4.04.
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Written By: Reuters
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