Cisco Systems Inc. said that its fiscal third-quarter sales may miss some analysts estimates due to emerging markets weakness and decreasing demand from telecommunications-service providers.
The company announced on a conference call that its revenue is expected to fall 6 to 8% in the current period that ends in April 2014. According to data compiled by Bloomberg, these numbers indicate sales in the interval between 11.2 and 11.5 billion dollars, which trails analysts average forecasts of 11.3 billion dollars.
The companys shares fell as much as 5.1% in extended trading. Its stock increased by less than 1% and reached 22.85 dollars at the close in New York. Ciscos net income was reported to have decreased by 55% to 1.43 billion dollars, which means 27 cents a share in comparison to some analysts forecasts estimated to 36 cents a share.
Cisco Systems Inc. is currently the largest network routers and switches manufacturer. However, the company is suffering from decreasing sales outside the U.S., which means facing the rivalry of Huawei Technologies Co., Juniper Networks Inc. and Hewlett-Packard Co. According to one of the analysts working for Edward Jones & Co. – Bill Kreher – the investors of the company shared their concerns that such a forecast comes as an indicator that Cisco will still need to deal with some difficulties in selling products in emerging markets.
Mr. Kreher said for Bloomberg: “There was some hope that the inflection point in the company’s business would happen earlier as opposed to later. But now, a return to growth in fiscal ’14 seems unlikely.”
The company is currently dealing with long-term difficulties due to emerging markets and telecommunications-service providers decreasing demand. This made Cisco Systems Inc. reduce its revenue forecast in December 2013. The average sales growth projected by the company was estimated to an interval between 3% and 6% in the next three to five years.
One of the analysts at Robert W. Bairds & Co – Mr. Jayson Noland said for Bloomberg: “There’s a concern that emerging markets aren’t going to come back, or that their position in service providers will continue to be under pressure.”
Cisco Systems Inc.s shares rose 0.62% to settle at $22.85 on Wednesday, marking a one-year change of +8.97%. According to CNN Money, the 34 analysts offering 12-month price forecasts for Cisco Systems Inc. have a median target of $24.75, with a high estimate of $30.00 and a low estimate of $16.00. The median estimate represents a +8.31% increase from the last close.
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