(Reuters) – Cisco Systems Inc reported second-quarter revenue and profit above Wall Street estimates on Wednesday, as the network gear maker benefited from strong growth in the newer businesses, such as software and cyber security.
FILE PHOTO: The logo of the AMERICAN networking giant Cisco Systems is seen at their headquarters in Issy-les-Moulineaux, near Paris, France, April 3, 2018. REUTERS/Philippe Wojazer/File Photo
Shares of the Dow component rose 3 percent in after-market trading after the company also boosted its share buyback program by $15 billion and raised its quarterly dividend.
Cisco turned to software and cyber security to offset slowing demand for the routers and switches, as companies increasingly shift to cloud services offered by Amazon.com Inc, Microsoft Corp and Alphabet Inc instead of building their own networks.
The company also forecast third-quarter earnings of 76 cents to 78 cents per share, the mid-point of which was in line with analysts’ estimates.
The revenue in the software business rose 24 percent to $1.47 billion, beating the estimates of $1.35 billion.
The turnover in the security company, which firewall offers protection and violation detection systems, increased 18 percent to $658 million, above estimates of $628.9 million.
Sales in the infrastructure platform business, which includes the company’s traditional business of providing switches and routers, increased by 6 percent to $7.13 billion. Analysts had expected revenue of $ 7.05 billion, according to the IBES data of Refinitiv.
The company reported net income of $2.8 billion, or 63 cents per share in the quarter that ended Jan. 26, compared with a loss of $8.78 billion, or $1.78 per share, a year earlier, when it took a charge of $11.1 billion related to the new U.S. tax legislation.
The total turnover rose by 4.7 percent to $12.45 billion. Analysts on average had expected revenue of $12.41 billion.
On an adjusted basis, the company earned 73 cents per share, beating estimates of 72 cents per share.
Reporting by Arjuna Panchadar in Bengaluru; Editing by Anil D’silva