Image source: Cisco Q3 Fiscal Year 2021 presentation, May 19, 2020
By Stephen Nellis and Tiyashi Datta
Cisco Systems Inc on Wednesday cautioned that supply chain issues will linger through the end of 2021 and forecast its current-quarter profit below estimates, sending shares of the network gear maker down 5%.
The warning comes as all tech companies are facing a global chip shortage.
"Notwithstanding what's going on in the supply chain, our revenue guide would have been higher, which could have probably flowed through to improving EPS as well," Chief Executive Officer Charles Robbins said during an earnings call.
Cisco forecast fourth-quarter profit of 81 cents to 83 cents per share, compared with estimates of 85 cents per share, and said it expected 6% to 8% revenue growth.
In an interview, Cisco Chief Financial Officer Scott Herren said the supply chain issues were temporary. For the third quarter ended May 1, the company reported a 7% rise in revenue to $12.80 billion from a year earlier, above analysts' average estimate of $12.56 billion according to IBES data from Refinitiv.
"Double-digit growth in orders was something we'd not seen since 2012," Herren said. "There's a lot to feel good about right now."
Cisco's service revenue surged 8% and product revenue rose 6%, boosted by a sustained demand for its videoconferencing platform, virtual private network and cybersecurity products as offices remained closed despite accelerated COVID-19 vaccinations.
Herren said 81% of the company's $3.8 billion fiscal third-quarter software revenue was recurring or from subscriptions, putting the company on track for more than $14 billion in software sales over the next 12 months. That figure "would make us one of the largest five or six software cos in the world," Herren said.
Net income rose to $2.86 billion, or 68 cents per share, from $2.77 billion, or 65 cents per share.
Excluding items, Cisco earned 83 cents per share, above analysts' estimates of 82 cents per share.