Cisco Systems (CSCO) shares powered higher Thursday after the the world’s biggest computer network equipment maker posted better-than-expected fourth quarter earnings as supply chain pressures and chip shortages eased into the summer months.
Cisco said adjusted non-GAAP earnings for the three months ending in July, the group’s fiscal fourth quarter, came in at 68 cents per share, down 4% from the same period last year and a penny ahead of the Street consensus forecast. Group revenues, Cisco said, were essentially flat from last year at $13.1billion, topping analysts’ estimates of a $2.73 billion tally.
The group said it sees fiscal 2023 revenue growth of between 4% and 6% with earnings of between $3.49 and $3.56 per share.
Fiscal first quarter margins are likely to narrow further, however, until supply chain pressures fully ease, Cisco cautioned, but noted that it sees gross margins returning to the 64% level into the first half of 2023.
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“We do expect to continue to experience higher costs in the short term, driven primarily by higher component, freight, and logistics costs, which is reflected in our Q1 guide,” said CEO Chuck Robbins. “However, as you’ll see in our annual guidance, we expect this margin pressure to begin to ease as the year progresses. Long term, there are many multiyear growth opportunities ahead of us that gives me confidence in our future.”
Cisco shares were marked 4.4% higher in pre-market trading to indicate an opening bell price of $48.70 each, a move that would still leave the stock down more than 22% for the year.