SEATTLE: Cisco Systems Inc gives a solid forecast for revenue in the current quarter, a sign the largest seller of networking gear is benefiting from demand for systems using artificial intelligence (AI) technology (tech).
Sales in the period ending in July will be US$14.5bil to US$14.7bil, Cisco said in a statement Wednesday.
Analysts polled by Bloomberg had predicted US$14.5bil on average.
Profit, excluding some items will be as high as 98 cents a share, compared with an average analyst estimate of 95 US cents.
Cisco is getting a boost from corporations and cloud computing providers expanding their networks – in part to handle a surge in AI software.
The outlook suggests that spending will continue even as some large data centre operators, like Microsoft Corp, pare back certain projects and some corporations hold off spending amid uncertainty about the economy and tariffs.
Under chief executive officer Chuck Robbins, Cisco has also been trying to expand in areas like cybersecurity and remote management tools, which are hosted in the cloud and have helped add billions of dollars in recurring revenue.
“The momentum we are seeing with AI is fuelled by the power of our secure networking portfolio, our trusted global partnerships and the value we bring to our customers,” Robbins said in the statement.
The shares rose more than 3% in extended trading following the announcement.
The stock had increased 3.5% this year heading into the earnings report.
Separately, Cisco announced some executive changes, including the departure of Scott Herren as chief financial officer.
He notified the company this month of his plan to retire July 26.
He will be succeeded by Mark Patterson, 55, an executive who has been at the company since 2000.
The company also named Jeetu Patel as president and chief product officer, effective Wednesday. The 53-year-old previously held the product role but as an executive vice-president.
Cisco’s switches and routers are key pieces of equipment that direct data traffic in and out of networks and around the Internet.
The company has also pushed further into software and services, a shift accelerated by last year’s acquisition of the data-crunching business Splunk.
Sales rose 11% to US$14.1bil in the fiscal third quarter, which ended April 26, in line with the average estimate.
Profit climbed to 96 US cents a share, minus some items. Wall Street projected 92 US cents.
Cisco’s product orders rose 20% from a year ago.
Minus the contribution from Splunk, new orders were up 9%, the company said.
The company also said that its forecasts include the effect of tariffs “based on current trade policy”. — Bloomberg
