Network gear maker Cisco Systems (NASDAQ: CSCO) Wednesday said its fourth-quarter earnings increased from last year on broad-based revenue growth. Earnings also exceeded expectations. Meanwhile, the stock dropped sharply in the after-hours session as the company’s first-quarter guidance fell short of expectations.
The San Jose, California-based tech firm reported a 6% growth in fourth-quarter revenues to $13.4 billion, which is broadly in line with the market’s expectation.
Infrastructure Platforms revenue grew 6% to $7.9 billion during the quarter, aided by stable demand for network switches including the hugely successful Catalyst 9000 switch. Applications division revenue rose 11% and Security segment revenue climbed 14%.
Consequently, adjusted earnings, excluding one-off items, advanced to $0.83 per share from $0.70 per share last year, beating the estimates. Reported profit was $2.2 billion or $0.51 per share, compared to $3.8 billion or $0.81 per share a year earlier.
“Our Q4 results marked a strong end to a great year. We are executing well in a dynamic environment, delivering tremendous innovation across our portfolio and extending our market leadership,” said CEO Chuck Robbins.
Buoyed by the positive results, the management currently expects adjusted gross margin rate to be between 64-65% in the first quarter of 2020. Revenue growth is forecast to be flat to up 2%. The estimate for adjusted earnings is between $0.80 per share and $0.82 per share.
Cisco has been investing heavily in high-growth businesses like cloud, Internet of Things and security, while also expanding its Applications and Security divisions through strategic deals, including acquisitions.
Being a market leader in its core areas of operation, Cisco has long been an investors’ favorite. The company’s shares climbed to a nine-year high earlier this year, after gaining steadily in the past twelve months. The stock, which also outperformed its peers in the technology and IT industry, got a major boost from the impressive financial performance in the third quarter.