Cisco Systems Inc (NASDAQ:CSCO) announced better-than-expected financial results for the third quarter, but projected weak earnings and revenue for the current quarter. The company also said that it plans to trim 1,100 additional jobs, as it prepares to shift its focus more towards software.
San Jose, California –based CSCO, like other leading tech companies, is targeting high-growth areas including cloud computing, security and Internet of Things amid stiff competition from rivals such as Juniper Networks and Huawei.
The company disclosed 5,500 layoffs in August last year. The newly announced cuts would cost an additional $150 million in pretax charges.
Cisco posted earnings of $2.52 billion, or 50 cents a share in the three-month period ended April 29, up from $2.35 billion, or 46 cents a share in the same period last year. On an adjusted basis, the company earned 60 cents per share.
Revenue came in at $11.94 billion, down 0.5 percent from year-earlier quarter. Analysts on average were looking for an adjusted profit of 58 cents and revenue of $11.89 billion.
Sales of Cisco’s routers remained sluggish and contributed to its sixth straight fall in revenue.
The company’s security business performed well as revenue from the segment jumped 9 percent to $527 million, though missed consensus forecast of $545.5 million. Some analysts believe that the security business is ready to take advantage from a likely surge in spending by firms and government institutions after the recent ransomware attack worldwide.
Looking forward, CSCO is expecting adjusted earnings in a range of 60 cents per share to 62 cents per share in the fourth quarter and revenue in between $11.88 billion and $12.13 billion. Analysts on average were looking for a profit of 62 cents on $12.51 billion in revenue.
CSCO shares plummeted nearly 8 percent in the pre-market on Thursday following weak financial outlook for the current quarter.