Cisco's Q3 gets boost from demand for work-from-home apps
[SAN FRANCISCO] Cisco Systems beat quarterly revenue and profit estimates on Wednesday as Covid-19 lockdowns globally boosted demand for its remote-work tools and networking equipment, sending the Dow component's shares up nearly 3 per cent after the bell.
The health crisis has forced many businesses to go completely online, increasing the use of video conferencing and virtual private network software, including Cisco's Webex and AnyConnect.
Revenue for the unit offering Webex declined, but Cisco executives said that was because it also provides older software whose sales have declined as Webex grew strongly. Cisco does not break out sales for Webex, which competes with Microsoft's Teams software and Zoom Video Communications.
"We are larger than Zoom, but they focus on the small and commercial and are trying to go into some enterprises. We have a strong footprint in the enterprise," chief financial officer Kelly Kramer said in an interview.
But Cisco executives gave a wider revenue forecast than usual and said that big one-time customer projects, like installing the latest generation of Wifi on corporate campuses, have in some cases been put on hold, especially in hard-hit industries such as retail.
"Some things are starting to open up. The question is how quickly they open up," Ms Kramer said. "Those verticals that are going to be challenged economically are going to be challenged no matter what kind of technology they are buying."
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Ms Kramer also reiterated to Reuters that European 5G equipment makers Nokia and Ericsson do not generate the kind of profits that Cisco looks for. US officials earlier this year had suggested an American company buy one of the firms to create a stronger Western competitor to Huawei Technologies, but Cisco chief executive Chuck Robbins ruled that out in an interview with the Financial Times in February.
Ms Kramer told Reuters on Wednesday that Cisco could profit from 5G networks by supplying data routing gear and software rather than cell-tower equipment.
"We've never been in that space. It's not necessarily a profitable space," Ms Kramer said. "If we do any acquisitions in this space, you'll see us do things along the lines that we have been doing in the software space."
The network gear maker estimated fourth-quarter revenue dropping 8.5 per cent to 11.5 per cent from a year earlier to between US$11.47 billion and US$11.86 billion. Analysts had expected US$11.82 billion, according to Refinitiv data.
Cisco's third-quarter revenue fell 8 per cent to US$12 billion, narrowly beating analysts' average estimate of US$11.7 billion.
Excluding items, earnings of 79 US cents per share topped expectations of 69 cents.
REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Technology
Meta’s results are best viewed through rose-tinted AI glasses
'Harvesting data': Latin American AI startups transform farming
After long peace, Big Tech faces US antitrust reckoning
Tech’s cash crunch sees creditors turn ‘violent’ with one another
Tech millionaires chase billionaire tax shields with ‘swap fund’
Elon Musk’s Starlink profits are more elusive than investors think