‘its real challenge is market share loss’

Shares of Cisco Systems Inc (NASDAQ: CSCO) are up 4.0% in extended trading after the networking-equipment company reported market-beating results for its fiscal fourth quarter.

Cisco Q4 earnings snapshot

• Net income slid 6.0% year-over-year to $2.82 billion
• EPS of 68 cents was below last year’s 71 cents
• Adjusted per-share earnings came in at 83 cents
• Revenue was unchanged YoY at $13.1 billion
• Annualised recurring revenue jumped 8.0% to $22.9 billion

In comparison, FactSet consensus was 82 cents of adjusted EPS and $12.73 billion in revenue. The report confirmed that spending on business technology was keeping resilient in the face of inflation.

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Discussing Cisco Q4 earnings in an interview with Yahoo Finance, JMP Securities’ Eric Suppiger said:

I think this is good news for the broader sector. This would suggest they’ve been effective at navigating some of the challenges that really hurt them in the last quarter and that they are, at least, past the most difficult periods of supply constraints.

Cisco System’s future outlook

For the current financial quarter, Cisco expects 82 cents to 84 cents of adjusted EPS on up to 4.0% increase in revenue. In comparison, analysts had called for 84 cents a share on a 3.0% decline in revenue.

It now sees a 4.0% to 6.0% increase in revenue this year; much better than 2.2% that experts had forecast. Suppiger added:

Cisco’s real challenge is market share loss. That’s been a long-term challenge for them. I think they’re struggling with that. Companies like Arista Networks and some best of breed technologies are able to chip away at different segments of Cisco’s dominant market share.

Wall Street suggests you buy Cisco stock that could eventually be worth as much as $65 a share.