Cisco delivered a positive forecast for first-quarter sales as the COVID-19 recovery in China eases supply chain constraints and helps meet demand for networking hardware, sending the company’s shares up 5 percent in extended trading. sends. Results announced on Wednesday show networking equipment makers are beginning to overcome the component shortage that kept them from tapping into a post-pandemic revival in digital infrastructure spending.
“Because of a challenging April related to COVID The shutdown in Shanghai … the overall supply shortfall began to ease slightly in the back half of the fourth quarter and continued into early Q1,” cisco Chief Executive Chuck Robbins said on a post-earnings call.
According to data from Refinitiv IBES, the networking major expects revenue for the current quarter to grow between 2% and 4%, while analysts expect it to remain flat. Annual revenue is projected to jump 4 percent to 6 percent.
“The guide was great as they started to consolidate the numbers from the year before. So the guide for the year and quarter is seen by the company as a sign of confidence,” said Chaim Siegel, analyst at Elazar Advisors.
Still, rising costs are a cause for concern for a manufacturer of routers, switches and communication equipment as it spends more on freight and logistics to ensure a steady supply of components.
After a decline in gross margin to 61.3 percent from 63.6 percent in the April-June quarter, CEO Robbins said higher costs will continue in the short term.
This was reflected in its first-quarter adjusted profit forecast of 82 cents (Rs 65.40) to 84 cents (Rs 66.99), whose midpoint was lower than the 84 cents estimate.
Adjusted profit for the fourth quarter was 83 cents (Rs 66.20) per share, a percentage point higher than estimates. Revenue came in at $13.1 billion (approximately Rs 1,04,500 crore), beating expectations of $12.73 billion (approximately Rs 1,01,500 crore).
© Thomson Reuters 2022