Cisco Q4 beats expectations, offers weak revenue forecast for Q1

Cisco released its fourth quarter earnings report after hours on Wednesday, beating on both its top and bottom lines. The company offered a forecast for its first quarter revenue which fell below investors’ expectations, anticipating a decline between 9% to 11%. Yahoo Finance’s Myles Udland breaks down the company’s earnings report.

Video Transcript

SEANA SMITH: All right, I want to get back to Myles. We have another earnings here after the bell. Cisco is out with its results. Myles, what do you have?

MYLES UDLAND: Yeah, so while Lyft shares up after earnings, Cisco shares are down. And it's really on the company's outlook here in the most recent quarter. This is Cisco's fiscal fourth quarter. The company reported adjusted earnings per share $0.80, better than $0.74 expected by the Street. Revenue $12.2 billion, better than the $12.1 expected by the Street.

But for the current quarter, which is Cisco's first fiscal quarter, they expect revenue to be down between a 9% and 11% against the prior year. The Street's expectations were for a 7% revenue decline. Also, Cisco forecasting is slightly weaker than expected earnings per share outlook for its current quarter, $0.69 to $0.71 on an adjusted basis. The Street was looking for something closer to $0.76.

So again, that stock is down about 5% after hours following a weaker-than-expected outlook despite reporting a stronger than forecast fourth quarter.

RICK NEWMAN: Just one thing about Cisco-- Cisco is considered representative of what's happening with business spending, just because so many companies have to spend money with Cisco to keep operations going. So Cisco had said earlier this year that the pandemic had led some of their big customers to say wow, some of our equipment is getting old. Maybe we need to upgrade, suggesting maybe there is a bit of a spending splurge coming in.

I guess there-- there don't see that anymore with that limited or that disappointing guidance. So for Cisco to say-- to guide a little bit lower in the next quarter is basically saying business spending, at least on IT equipment, is not looking so great overall either.

SEANA SMITH: It certainly will be interesting to get a little bit more color from their executive team during this call in just less than an hour from now, because going along with what you were saying, IT spending is so important here. And this is a crucial barometer for IT spending. It proved to be, I guess, a big win here for some of the tech companies during the COVID pandemic. So it will be interesting as we get more color from Cisco here in less than an hour.