Cisco Gives Bullish Outlook, Boosts Buyback by $25 Billion

Cisco Systems gave a bullish forecast for sales and profit, indicating companies are spending to upgrade their computer infrastructure, according to Bloomberg.

Revenue in the current period will climb as much as 5 percent from a year earlier, the company said in a statement. That indicates sales as high as $12.5 billion, compared with an average analyst estimate of $12.1 billion. Adjusted profit in the quarter ending in April will be as much as 66 cents a share, the company said. Analysts projected 63 cents.

Sales rose for the first time in eight quarters to $11.9 billion in the three months ended Jan. 27, also coming in ahead of estimates. The shares rose 5.7 percent in extended trading to $44.49. They had risen 10 percent this year through the close of official trading.

Infrastructure platforms, which includes Cisco’s main switch and router businesses, had sales of $6.7 billion, up 2 percent from a year earlier. Applications, its software and teleconferencing products unit, increased 6 percent to $1.2 billion. Security-related sales rose 6 percent to $558 million.

Deferred revenue in the form of recurring software and subscriptions was up 36 percent from a year earlier at $5.5 billion. Executives point to that as the key indicator of its future performance and progress toward becoming less reliant on hardware.

Cisco is one of the richest companies in the technology industry. It has more than $70 billion in cash, most of which was earned overseas and parked there. The company will now bring back some of that money and devote an additional $25 billion to buying back stock. Cisco took a charge of $11.1 billion related to new tax laws, leading to a net loss of $1.78 a share in the second quarter. Excluding some items, it reported a profit of 63 cents a share, beating analysts’ estimates for 59 cents.