Cisco Systems, a leader in networking technology, recently announced its fiscal fourth-quarter results. While the results indicated a year-over-year decline, they surpassed Wall Street's expectations. The company disclosed that it plans a restructuring initiative that is likely to impact approximately 7% of its global workforce.
This decision comes as part of a strategic realignment to enhance operational efficiency within the organization. For the three months ending on July 27, Cisco reported adjusted per-share earnings of $0.87, down from $1.14 in the previous year. This figure, however, slightly exceeded the consensus estimate of $0.85 according to Capital IQ.
Overall revenue for the quarter fell by 10%, totaling $13.64 billion, yet it still managed to surpass the analyst expectations of $13.54 billion. Following the earnings release, Cisco's stock showed resilience, climbing 6% in after-hours trading. Cisco's CEO, Chuck Robbins, provided insights into the company's performance, stating, "In our fourth quarter, we saw steady customer demand with order growth across the business as customers rely on Cisco to connect and protect all aspects of their organizations in the era of artificial intelligence." The anticipated restructuring plan is projected to incur pre-tax GAAP charges of up to $1 billion, with Cisco expecting to recognize $700 million to $800 million of these costs in the first quarter of fiscal 2025.
The remaining charges are expected to be accounted for through the rest of the fiscal year. Breaking down the performance by segments, product sales saw a significant decline of 15% year-over-year, coming in at $9.86 billion, which primarily affected the networking sector negatively. Conversely, the services segment exhibited a positive trend, rising by 6% to $3.78 billion, indicating a growing demand for Cisco's service-based offerings.
Additionally, the integration of Splunk, a cybersecurity firm acquired by Cisco in March, contributed approximately $960 million to the revenue in Q4. Looking ahead, Cisco provided a forecast for fiscal 2025, estimating adjusted earnings per share between $3.52 and $3.58, with expected revenues ranging from $55 billion to $56.2 billion.
Analysts, as surveyed by Capital IQ, anticipate a normalized EPS of $3.55 and a revenue figure of $55.68 billion. For the upcoming first quarter, Cisco has projected adjusted EPS between $0.86 and $0.88, with revenue anticipated between $13.65 billion and $13.85 billion, aligning closely with analyst consensus estimates of $0.85 EPS and $13.76 billion in revenue. Currently, Cisco's stock price stands at $48.04, reflecting a change of +2.60, or a percent change of +5.72.
Investors and analysts alike are keenly watching how these developments will influence the company's trajectory in the coming fiscal periods..