Cisco posted $12.7 billion in revenue for year-over-year growth of nearly four percent in its first quarter earnings report Thursday, but warned investors its second quarter growth will likely be lower than expected.
Thursday’s reported revenue slightly beat Wall Street’s expectations of $12.65 billion and three percent growth, but the company’s forecast of zero to two percent growth for the coming quarter fell markedly short of the five percent growth analysts had hoped for. As of 10:30 a.m. Friday, Cisco shares were down over 5 percent on the news.
Cisco CEO Chuck Robbins said the weak forecast comes courtesy of global economic troubles and fluctuating foreign exchange rates.
“Our guidance reflects lower than expected order growth in Q1, driven largely by the uncertainty of the macro environment and currency impacts,” Robbins said. “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.”
In this quarter, GAAP net income was $2.4 billion with an earnings per share (EPS) of 48 cents, both of which were up more than 30 percent year over year from $1.8 billion and 35 cents, respectively. Total revenue growth was driven by a four percent increase in product revenue as well as a one percent increase in service revenue. Product revenue, in turn, was boosted by a 24 percent increase in Data Center revenue and a 17 percent increase in Collaboration revenue. Wireless and Security revenues both grew by seven percent each.
By geographic segment, revenue from the Americas was up four percent, and revenues for both the Europe, Middle East and Africa and Asia Pacific, Japan and China segments were up three percent each.
Cisco’s earnings report comes on the heels of a recently announced network partnership with Ericsson that is expected to bring in $1 billion in revenue for each company by 2018.