Shares of Cisco (NASDAQ:CSCO), the biggest maker of machines running computer networks and the internet, rose about 5% in extended trading Wednesday after reporting fiscal first-quarter results that beat analysts' estimates.
To align with changing business conditions, the digital communications firm also unveiled a plan to cut jobs and reduce office space.
Earnings per share were $0.86, while revenue increased to $13.6 billion, up 5.7% year-over-year and above expectations of $13.29 billion. The total annualized recurring revenue (ARR) climbed 7% to $23.2 billion from the year-ago period. Software revenue increased by 5%.
Up 12% from a year earlier, Cisco's top business segment, which includes data-center networking switches, delivered revenue of $6.68 billion.
"Our fiscal 2023 is off to a good start as we delivered the largest quarterly revenue and second highest quarterly non-GAAP earnings per share in our history",
said chair and CEO of Cisco, Chuck Robbins.
Meanwhile, beginning in the current quarter, Cisco said a restructuring plan would involve cutting jobs to "rebalance the organization" and align better with work-from-home and hybrid employees through office closings.
Although the restructuring plan would affect about 5% of the company's staff, Chief of Finance Scott Herren said employees will have the opportunity to move to other positions at Cisco.
As a result of positive earnings, looking ahead, Cisco also gave a robust quarterly revenue forecast saying sales in the quarter ending in January will jump between 4.5% to 6.5%.
Revenues for this fiscal year are expected to range between $54 billion and $55 billion, with gross margins in the 63% to 64% range. Cisco hadn't expected to reach this level until the second half of this fiscal year.
Cisco reported "solid" results, said Oppenheimer analyst Ittai Kidron, which reflect "a stable demand environment and improving supply conditions amidst a tough macro environment."
JMP Securities analyst Erik Suppiger, who carries a 'market perform' rating on the stock, echoed Kidron's sentiment.
Suppiger noted, "while Cisco beat the consensus estimates and guided slightly above the consensus estimates, the performance in the quarter materially benefited from an improved supply chain that enabled Chisco to ship orders that had been held in backlog."
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