Networking equipment manufacturer Cisco has posted modest profits in Q1 of fiscal 2014 but its shares plunged as the company announced gloomy outlook.
On Wednesday, November 13, Cisco posted its financial results for the quarter ended October 26. Cisco posted profit of $2 billion, or 37 cents a share, for Q1 of fiscal 2014, down by 4.6 percent compared to a profit of $2.1 billion, or 39 cents a share posted in Q1 of fiscal 2013.
Revenue of the company rose to $12.1 billion in Q1 of fiscal 2014 from $11.9 billion when compared to the same quarter of fiscal 2013. Adjusted profit for Cisco was 53 cents a share up from 48 cents when compared to Q1 of fiscal 2013. The revenue of the company beat analysts' prediction who estimated a profit of 51 cents per share, on revenue of $12.35 billion.
"This quarter we delivered record non-GAAP profitability and continued our steady stream of innovation and market leadership," said John Chambers, Cisco Chairman and CEO. "While our revenue growth was below our expectation, our financials are strong, our strategy is strong and our innovation engine is executing extremely well. We remain confident in our long-term goal to be the #1 IT company in the world and help our customers solve their biggest business problems."
The network equipment designer and manufacturer also announced its forecast for the current quarter, which seems very gloomy. Cisco sent analysts and investors for a shock by announcing that its second-quarter revenue may drop 8 percent to 10 percent when compared to Q1 of fiscal 2013. Analysts had estimated around 4 percent revenue growth in the Q2 of fiscal 2014.
Chambers warned of a "very slow spending environment" even as the company indicated it is bracing for challenges from Asian hardware manufacturers such as Huawei, that are building basic routers and switches for companies like Facebook and Google, which use software to boost their networks' performance.
The company also announced that its board has authorized a plan to repurchase an additional $15 billion in shares.
Cisco shares closed at $21.36, down 10.96 percent at NASDAQ on Thursday.
