Cisco Slides After Forecasts Miss Most Optimistic Views
CEO Robbins optimistic shift from hardware-focused to software-focused business will drive growth in future
May 17, 2018
Ian King (Bloomberg) -- Cisco Systems Inc. shares slipped after the network-equipment maker’s fourth-quarter forecasts fell short of Wall Street’s most optimistic projections.
Before the company provided its outlook for the current period, the stock had surged 32 percent in a year, last week reaching the highest price in more than 17 years. While Cisco said it’s optimistic about demand and predicted a third straight period of sales growth, some investors had been betting on a faster acceleration. The shares fell almost 4 percent to $43.44 at 9:38 a.m. in New York.
Cisco still relies on hardware for more than half of its revenue, and it’s posted sales growth in only two of the past nine quarters. Chief Executive Officer Chuck Robbins has been working to make the company less dependent on the market for expensive equipment by making its hardware more flexible and selling more networking services and software. For now, increased spending on networking gear is buoying Cisco’s main business, buying more time for its increasing backlog of deferred software and services revenue to translate into more sustained sales growth.