By WSJ City
Cisco closed the business year with the largest revenue increase since 2013 but projected disappointing growth this quarter on lower spending from telecommunication companies and weakness in China.
--- Shares, which closed lower on Wednesday at $50.61, fell 8% to $46.78 in after-hours trading.
--- It expects revenue for the current quarter to be flat to 2% higher from the prior year, lower than expectations.
--- The company also projected per-share earnings below analysts' forecasts.
--- The largest drivers of the forecast are the continued decline in business from service providers, and China.
--- Quarterly profit fell 42% to $2.21bn and reflected a reversal of a tax benefit that had been recorded last year.
--- The company's income tax bill in the period ended July 27 was $1.5bn after it recorded a $211m benefit a year earlier.
--- On an adjusted basis, profit rose to 83 cents a share from 70 cents a share. Revenue climbed 4.6% to $13.43bn.
Why This Matters
Cisco is considered a proxy for high-tech hardware demand, and analysts have been watching how the company navigates trade issues.The Silicon Valley company, which outsources all of its manufacturing, has largely offset financial damage from tariffs by raising prices and moving contract manufacturing away from China. Chief executive, Chuck Robbins (pictured), said the company was performing well "at a time of uncertainty."
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