Cisco Systems Inc reported first quarter results that beat estimates but expects flat earnings and slower revenue growth for the current quarter.<\/p>\n
“We are modeling Europe to get worse before it gets better,” Chief Executive John Chambers said on Tuesday, echoing his comments from the company’s fourth-quarter earnings call in August.<\/p>\n
However, he added that “we see signs of improvement in the U.S. in enterprise, service provider and commercial.”<\/p>\n
Still, Chamber said, it was too early to speak of a trend “though we are continuing to see what we like.”<\/p>\n
Cisco said it expects earnings per share, excluding items, of 47 cents to 48 cents in its fiscal second quarter, which runs until the end of January. A year earlier it reported EPS of 47 cents.<\/p>\n
It also said it sees revenue growth in a range of 3.5 percent to 5.5 percent, compared with 11.6 percent growth in the second quarter of 2012.<\/p>\n
Chambers said he would give a long-term outlook at the company’s financial analyst day next month.<\/p>\n
In its first quarter, which ran until the end of October, Cisco surprised analysts with a solid beat, due to cost cuts and the company’s broad product range.<\/p>\n
First-quarter net income, excluding items, rose 10.6 percent to $2.6 billion, or 48 cents per share, compared with analysts’ average estimate of 46 cents a share as compiled by Thomson Reuters I\/B\/E\/S.<\/p>\n
Revenue rose 6 percent from the year-ago quarter to $11.9 billion, compared with a Street view of $11.77 billion.<\/p>\n
Cisco’s shares rose 6.7 percent to $17.98 in after-hours trading.<\/p>\n
Analysts applauded the company’s cost discipline and welcomed solid results in a tough environment.<\/p>\n
“Given concern about enterprise spending, the company seems to be bucking the trends,” said Bill Kreher, senior technology analyst at Edward Jones.<\/p>\n
“The bar was low but the company did exceed those expectations. The company appears to be using strong cost discipline in meeting their numbers.”<\/p>\n
Mizuho Securities analyst Joanna Makris said “at first blush these are good numbers in a bad macro (environment).”<\/p>\n
“It’s largely due to a product mix – a larger shift to routing – and cost cutting,” adding that “this is better than expected. We have been thinking they would squeak by on the top line.”<\/p>\n
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