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Cisco expects fourth-quarter revenue to beat estimates due to enterprise demand

(Reuters) – Cisco Systems forecast fourth-quarter revenue above weak analyst expectations on Wednesday, as the networking equipment maker benefits from a recovery in corporate spending and easing supply chain constraints. ‘supply.

The company has been trying to reduce its reliance on its massive networking equipment business, which has suffered in recent years from supply chain issues and a post-pandemic slowdown in demand.

In recent quarters, Cisco has benefited from increased spending as companies try to meet their growing needs for artificial intelligence and cloud computing.

“Customers are consuming equipment delivered over the past few quarters in line with our expectations and we are seeing demand stabilize as a result. The addition of Splunk to our product line will be a catalyst for future growth,” Scott said, CFO of Cisco. Herren said.

Shares of the company rose about 4.7% to $51.98 in extended trading Wednesday. Before the earnings release, Cisco shares had fallen about 2% year to date, a far cry from the S&P 500’s 11% gain over that period.

Cisco forecast fourth-quarter revenue in the range of $13.4 billion to $13.6 billion, compared with analyst estimates of $13.23 billion, according to LSEG data.

For the third quarter, revenue fell 13% to $12.7 billion, but beat estimates of $12.53 billion. Splunk, acquired by Cisco to improve its cybersecurity capabilities, contributed $413 million.

Cisco’s revenue has fallen for two straight quarters as the company faces an inventory backlog.

There is potential for aggressive pricing strategies to reduce inventory levels, which could put pressure on margins through the end of 2024, said Joe Brunetto, an analyst at Third Bridge.

On an adjusted basis, Cisco earned 88 cents per share, beating estimates of 82 cents.

(Reporting by Juby Babu in Mexico; Editing by Shounak Dasgupta)

News Source : finance.yahoo.com
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