The stock price of Cisco Systems, Inc. (NASDAQ:CSCO) declined during the extended trading despite reporting quarterly financial results that exceeded the expectations of Wall Street analysts.
The company’s shares were negatively impacted by its weak earnings guidance for the second quarter. The stock price of the Cisco fell more than 5% to $27.85 per share around 5:27 in the afternoon in New York on Thursday.
Cisco financial results
Cisco reported adjusted earnings of $0.59 per share in $12.7 billion in revenue for it first quarter fiscal 2016. During the same period a year ago, Cisco achieved earning of $0.54 per share on $12.2 billion in revenue.
Wall Street analysts expected the company to deliver earnings of $0.56 per share on $12.65 billion in revenue for the quarter.
In a statement, Cisco CEO Chuck Robbins said, “Q1 was a very strong quarter. We are accelerating our ability to deliver on growth opportunities, aggressively driving our cloud business, and delivering continued strength in our deferred product revenue, as we sell more of our portfolio in software and cloud models.”
Cisco achieved a 4% increase in product revenue and 1% increase in service revenue. Its total revenue in the Americas climbed 4%, EMEA and APCG each rose 3%.
The company said its gross margin was 63.2% during the quarter. Its cash flow from operating activities was $2.8 billion and deferred revenue was $15.2 billion, up 10%. Cisco ended the quarter with $59.1 billion in cash, cash equivalents and investments.
Business outlook
For the second quarter, Cisco expected to deliver non-GAAO earnings of around $0.53 to $0.55 per share, below that $0.56 per share estimated by analysts.
The company expected to its revenue to be flat or to increase 2% year-over-year, and non-GAAP gross margin of around 62% to 63%.
Cisco explained that its second quarter guidance excludes its CPE business, which was previously announced to be acquired by Technicolor.
“We guided to solid growth in Q2. Our guidance reflects lower than expected order growth in Q1, driven largely by the uncertainty of the macro environment and currency impacts. Despite these headwinds, I believe we are executing very well. We are moving very fast to capture new opportunities and I feel good about how we are positioned for the second half of the year,” said Robbins.
