(Bloomberg) – Cisco Systems Inc., the largest maker of computer networking equipment, gave an optimistic forecast for sales growth in the coming years, but disappointed analysts with its earnings projections.
Revenue will increase from 5% to 7% over the next four fiscal years, the company told analysts and investors during a presentation on Wednesday. This surpassed Wall Street projections. Earnings per share, excluding certain items, will increase at about the same rate, and this is where the company fell short. Analysts were looking for greater efficiency to help increase profits at a faster rate than sales.
Shares of Cisco fell 0.5% to $ 57.56 in New York after the event. They are still up 29% this year.
CEO Chuck Robbins said Cisco would continue to invest in business opportunities, but struggles with the higher cost of components amid the global shortage of semiconductors.
“It’s frustrating because we can’t offer all the products our customers want,” he said in an interview. While those limitations are likely to decrease next year, Cisco will continue to invest money in projects that drive its long-term revenue growth, he said. This means putting less emphasis on earnings per share.
Robbins has been working to transform the Silicon Valley leader into an Internet-delivered network service provider and software vendor, rather than just an equipment provider. which form the backbone of computer networks, but that is changing. Subscription revenue will reach 50% of Cisco’s total fiscal 2025, the company predicted Wednesday.
Wall Street expected revenue growth to exceed fiscal 2022 by 6% and then slow down, according to data collected by Bloomberg. But they had higher earnings expectations, with growth expected to reach 9% annually in 2025.
San Jose, California-based company executives said Cisco gets a boost from the home work shift. Companies are rushing to upgrade their hardware and software to adapt to change. In addition, they add security and shift workloads to cloud service providers, a market that Cisco now offers more and more with new products.
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