By Maria Armental
Cisco Systems Inc., the networking-equipment giant, projected its first quarterly revenue decline in more than two years, blaming what it called a pause in customer spending.
The company, considered a proxy for corporate high-tech hardware demand, expects revenue to fall 3% to 5% this quarter. Analysts polled by FactSet were expecting revenue to increase by about 2.4% to $12.75 billion.
Chief Executive Chuck Robbins said during a conference call with analysts that the weakness the company saw in the fourth quarter carried into the first quarter and was more pronounced and broad-based than the company initially thought.
"We've effectively assumed that it will stay as is," he said. "We haven't modeled any material further deterioration or improvement, I think, in what we've put forward today."
Shares dropped 4.8% to $46.13 in Wednesday's after-hours trading.
Cisco's first-quarter revenue rose 0.7% to $13.16 billion, beating analysts' projections and at the low end of Cisco's projection of flat to up 2%.
At Cisco's core business, selling switches, routers and other networking equipment to businesses, revenue fell 1% to $7.54 billion, shy of analysts' forecasts.
Revenue from Cisco's applications business, which includes videoconferencing and other products, rose 6% to $1.5 billion, just above analysts' projections, and revenue in its small but fast-growing security segment rose 22% to $815 million, well ahead of analysts' projections.
Cisco reported first-quarter profit fell 18% to $2.93 billion, or 68 cents a share. On an adjusted basis, profit rose to 84 cents a share from 75 cents a share a year earlier.
Analysts expected adjusted earnings of 81 cents a share.
For the current quarter, the company expects adjusted earnings between 75 cents and 77 cents a share. Analysts projected 79 cents a share.
Cisco said it still expects to wrap up during the second half of the current business year the acquisition of Acacia Communications Inc. The deal requires approval in China.
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