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Cisco Yields to Slowdown Fears

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Cisco stated it expects income progress of flat to up 2% 12 months over 12 months for the present quarter. Analysts had been anticipating 3% progress.


Picture:

sergio perez/Reuters

Up to date Aug. 14, 2019 6:44 pm ET

For

Cisco
,

CSCO -4.00%

being a prettier home in a nasty neighborhood isn’t sufficient.

That was significantly so on a day like Wednesday, which noticed the inventory market rattled over recession fears sparked by an inverted yield curve. Cisco’s fiscal fourth-quarter outcomes, posted after the closing bell, got here in forward of Wall Avenue’s forecasts and mirrored the community tools large’s finest 12 months of progress since 2013. However Cisco’s forecast for the present quarter was a bit under expectations, knocking a inventory that had already shed 4% through the common session down one other 7% after hours.

Cisco’s outlook wasn’t as dangerous as many feared, particularly contemplating the grim image painted by peer

NetApp

lower than two weeks in the past. In a preannouncement of its personal outcomes, the supplier of enterprise data-storage methods cited a “significant deceleration” in enterprise spending on high-tech gear. That slowdown was sufficient for NetApp to flip its projection from single-digit progress for its present fiscal 12 months to a 5% to 10% drop in income. Cisco doesn’t give full-year forecasts, however the firm stated it expects income progress of flat to up 2% 12 months over 12 months for the present quarter. Analysts had been anticipating 3% progress.

It helps that Cisco is robust in the suitable locations. Analyst Simon Leopold of Raymond James notes that the corporate has much less direct publicity to the extra challenged markets of storage and servers than lots of its friends. And Cisco has steadily been increasing its safety and software program enterprise strains which have higher progress prospects forward.

However with such a broad international enterprise, Cisco isn’t proof against international financial woes. Chief Government Officer

Chuck Robbins

stated on Wednesday’s earnings name that the corporate did see some “slight early indications of some macro shifts” within the month of July that it didn’t see within the prior quarter. That would finally derail Wall Avenue’s hopes for a continued streak by the corporate, with income anticipated to develop 3% yearly over the following two fiscal years.

In a fearful market, Cisco’s numbers simply weren’t comforting.

Write to Dan Gallagher at dan.gallagher@wsj.com

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Business/Markets

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