On Wednesday after the close, Cisco (CSCO) reported January quarter revenue of $12.01 billion (down 4% annually) and non-GAAP EPS of $0.77, topping consensus analyst estimates of $11.97 billion and $0.76.
The company also guided for revenue to be down -1.5% to -3.5% annually during its April quarter, and for EPS to be in a range of $0.79 to $0.81. That’s in line with a consensus for revenue to drop -2.6% to $12.62 billion, and for EPS to come in at $0.80.
Cisco also hiked its quarterly dividend by a penny to $0.36 per share. The forward yield now stands at 3%.
Cisco shares are down -4.6% in after-hours trading to $47.62, leaving it 18% below a 52-week high of $58.26.
Some key points from the earnings call:
1. Cisco disclosed that its closely-watched product orders fell 6% annually last quarter, after dropping 4% in the October quarter.
2. Ciscoâ€™s Applications segment, which covers many of its software businesses, saw product revenue drop -8% annually to $1.35 billion, missing a $1.43 billion consensus. Applications revenue had been up +6% in the October quarter.
3. Ciscoâ€™s Infrastructure Platforms segment, which covers its core hardware franchises and related software sales, saw revenue drop 8% to $6.53 billion, following a 1% drop in the October quarter.
4. Ciscoâ€™s total product revenue fell -6% to $8.67 billion, however its services revenue, which covers both standalone services and maintenance/support services for products, rose +5% to to $3.33 billion. Security product revenue rose +9% to $748 million, topping consensus by $6 million.
5. Following $768 million worth of buybacks in the October quarter, Cisco spent $870 million in the January quarter to repurchase about 18 million shares at an average price of $46.71. The company has $11.8 billion left on its buyback authorization, which of course can be expanded whenever it wishes.
6. Cisco is seeing DRAM prices, which fell sharply in 2019 and boosted Ciscoâ€™s margins in the process, start to edge higher again.
Cisco (CSCO) shares are up +5.1% over the past 12 months. The broader S&P 500 index SPX, is up +22.8% over those same 12 months.
At Wednesday’s close, Cisco (CSCO) was up +4.11% year-to-date. As noted above Cisco is currently down -4.6% in after hours, essentially wiping out the year-to-date gain.