(Bloomberg) — Cisco Systems Inc., the biggest maker of computer networking equipment, gave an annual profit forecast that was in line with estimates, indicating that pricing pressure may linger in the coming quarters even as orders reached the highest level in a decade.
Earnings, excluding some items, will be $3.38 to $3.45 a share in the fiscal year ending next July, the San Jose, California-based company said Wednesday in a statement. Analysts, on average, projected $3.41 a share.
Fiscal 2022 revenue will increase 5% to 7% from this year. That compares with analysts’ average estimate of a 5% gain, according to data compiled by Bloomberg.
Chief Executive Officer Chuck Robbins is trying to reposition the company as a provider of networking services delivered over the internet and a seller of software. The company still gets the bulk of its revenue from the expensive switches and routers that are the backbone of computer networks and direct internet traffic.
Cisco shares fell about 1% in extended trading, after closing at $55.15 in New York. The stock has gained 23% this year.
During the Covid-19 lockdowns, Cisco suffered slower demand for its hardware from corporations that cut spending on in-house equipment while most of their employees were working remotely. Cisco’s software and services that support a more distributed work environment helped make up for some of that shortfall.
The company reported increasing demand early in 2021, but said that profit would be constrained by the higher cost of procuring parts. Like many other companies, Cisco is feeling the pinch of a shortage of semiconductors that has increased the price of components and fees to expedite shipments. The company’s revenue growth was also limited by the lack of chips.
Sales in the current quarter will increase 7.5% to 9.5% from a year earlier, the company said. Profit, excluding certain items, will be 79 to 81 cents a share, in the period ending in October. Analysts estimated 81 cents.Fiscal fourth-quarter revenue increased 8% to $13.1 billion, beating estimates. Profit, minus certain items, was 84 cents a share, compared with an average estimate of 83 cents.
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