Cisco second-quarter forecast misses on order slowdown

Thu Nov 12, 2015 6:00pm EST
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By Lehar Maan

(Reuters) - Network equipment maker Cisco Systems Inc's (CSCO.O: Quote) forecast adjusted profit and revenue growth for the second quarter below analysts' estimates, citing a slowdown in order growth and weakness in its enterprise business outside the United States.

Shares of Cisco, considered a bellwether for the performance of the broader network gear industry, fell 5 percent to $26.41 in extended trading on Thursday.

A strong dollar hurt demand for Cisco's enterprise products in Asia-Pacific, Canada and Latin America, said Chief Executive Officer Chuck Robbins, who succeeded long-time CEO John Chambers in July.

"Our guidance reflects lower-than-expected order growth in the first quarter, driven largely by the uncertainty of the macro environment and currency impacts," Robbins added.

Cisco said it expected adjusted profit of 53-55 cents and revenue to be flat to up 2 percent, which translates into $11.94 billion-$12.17 billion.

Analysts were expecting a profit of 56 cents on revenue of $12.55 billion, according to Thomson Reuters I/B/E/S.

Needham & Co analyst Alex Henderson attributed Cisco's disappointing forecast to its exposure to emerging markets.

"It has a much higher percentage exposure to those emerging markets than most companies," Henderson said.   Continued...

Chuck Robbins, chief executive officer of Cisco Systems in Laguna Beach, California October 20, 2015.      REUTERS/Mike Blake