Cisco returns to growth, stock pops

Reuters

That compares to a profit of Dollars 2.3 billion or 47 cents a share a year ago.

With revenue growth of 3 percent, Cisco has finally ended its streak of two years straight of year-over-year revenue declines, while also continuing its pattern of beating expectations since Chuck Robbins took over as its CEO.

The net result in Q2 was a loss of United States dollars 8.8 billion or USD 1.78 per share, due to charges of USD 11.1 billion for the U.S. corporate tax reform. The company's own guidance from the previous quarter accurately predicted the return to growth.

"Q2 was a great quarter with 3 per cent revenue growth and strong margins and cash flow", said Kelly Kramer, CFO of Cisco.

"Product revenue performance reflected solid growth in applications and security, which each increased 6 per cent. Infrastructure platforms increased by 2 per cent", the company said.

Cisco does not break out revenue figures for its software business as a whole, but said that 52 per cent of software revenue came from subscriptions.

Proponents of the tax law say the plan gives companies motivation to bring money overseas back to the U.S.

Additionally, Cisco said it is raising its quarterly dividend payment to 33 cents a share from 29 cents, and added $25 billion to its stock buyback plan. Cisco's tax provision rate for the fiscal second quarter was 20 percent, excluding certain items, down from 22 percent one year earlier. Analysts were looking for 63 cents, excluding certain items, on $12.13 billion in revenue for the fiscal third quarter, according to Thomson Reuters. The outlook includes the recently completed acquisition of Broadsoft.

Projected earnings per share (adjusted) for the fiscal third quarter of 2018 are $0.64 to $0.66, compared to analyst estimates of $0.63.

"We continued to drive momentum in our intent-based networking portfolio and saw strength across the business", Robbins said.

Cisco's share price rose over seven per cent in after-hours trading yesterday.

Cisco also said it lost $8.8 billion, or $1.78 a share, in the quarter that ended January 27.

Cisco's operating cash flow increased 8 percent year-on-year to Dollars 4.1 billion.

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