(Bloomberg) - Cisco Systems Inc. made a profit after the company made an optimistic sales forecast for the quarter, helping by companies that leverage more AI technology on their computing infrastructure.
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Cisco said in a statement Wednesday that revenue in the quarter ending in April would be $13.9 billion to $14.1 billion. Analysts predicted a number at the bottom of the range.
The company, the largest online equipment seller, also raised its target for fiscal 2025 targets by about $1 billion to more than $56 billion. By comparison, the average estimate is $55.97 billion.
Enterprise customers have been strengthening their networking systems to help speed up the creation and use of artificial intelligence. The outlook suggests that spending for these clients is helping to make up for weak federal orders, which suspended some projects following the administrative changes in Washington.
"As artificial intelligence becomes more common, we are helping customers expand network infrastructure, improve data capacity requirements and adopt top-notch AI security," said CEO Chuck Robbins in a statement. In good condition.”
Cisco shares rose 6.4% after New York opened on Thursday, their biggest same-day increase in six months.
Cisco's switches and routers are key devices that flow data into and around the network and around the internet. The company has also furthered its software and services, a transformation accelerated by last year's acquisition of Splunk's data processing business.
The company said product orders rose 29% from a year ago, a year ago, and the fiscal second quarter ended on January 25.
Cisco said in another filing that Gary Steele, the company's president of the listing division, will leave. The executive who previously operated Splunk was working as CEO in an unidentified business.
Government slows down
Although demand in the public sector is not as high as previously experienced, weaknesses are primarily limited to a portion of this market. Cisco obtains most of its U.S. government operations from the Department of Defense, while other agencies only have about 25%. Chief Financial Officer Scott Herren said in an interview that it was the government that had fewer orders from civilian divisions.
During the call, executives raised questions about proposed tariffs on goods imported from Canada, Mexico and China. Analysts ask customers if they are rushing to order now to avoid the possibility of higher prices later.
Cisco understates that it has learned valuable lessons from the pandemic’s supply measures. The company now has a more diverse supply chain and uses contract manufacturers to facilities in multiple locations.
This will help companies adjust to mitigate the impact of tariffs, Herron said. Raising the price will be the last leverage it pulls. He added that the company's financial forecast includes the impact of tariffs on costs.
"I feel we've played the risk," Herron said.
Recurring income
Sales rose 9% in the second quarter to $14 billion, slightly above the average estimate of $13.9 billion. The expansion of revenue during this period was the company's first revenue in a year.
Profit climbed to 94 cents per share, minus some items. Wall Street is expected to be 91 cents.
Under Robbins, Cisco has been trying to reduce one-time sales of large equipment. The company has made progress in this regard. Products like security and remote management tools hosted in the cloud help increase billions of dollars in regular revenue.
The company said deferred revenue (a sign of future sales) now totals $27.8 billion. This is an 8% increase from a year ago.
The company's board of directors has also approved an additional $15 billion to its stock buyback program. This brings the repo budget to $17 billion.
(Using updates for shared mobile in paragraph 6.)
Most of them come from Bloomberg Business Weekly
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