Cisco Reports a Gloomy Picture after Poor Q4 2017 Outlook

CiscoCisco Systems Inc (NASDAQ: CSCO) which is a California-based company situated in San Jose has reported higher than anticipated revenue and earnings in the 3rd quarter of fiscal 2017. Unfortunately, the company has presented a not so encouraging estimate for Q4 earnings and revenue which has inadvertently pushed the stocks low by 5 percent to $33.80.

We expect the stocks of the company to remain weak and decline further in the coming week because of the layoffs and shifting of the customers to remote data centres.

The Q3 2017 revenue for Cisco was $11.94 billion whereas, during the same period last year, the overall income was $12 billion. There is a $10 million increase in product revenue on year to year basis to $8.885 billion whereas there was a decline of $70 million on year to year base to $3.055 billion in the service revenue.

After the end of the quarter in April 2017, the net income was $2.515 billion which comes to $0.50 per share compared to $2.349 billion or $0.46 per share last year in the same period.

Cisco Systems Inc

If we exclude the impairment and restructuring costs, amortisation of intangible assets and share-based compensation expenses among others, the non-GAAP net income in Q3 2017 increased to $3.026 billion or $0.60 per share. During the same period last year, the non-GAAP income was $2.880 or $0.57 per share. These figures are more than the expected figures speculated by the analysts at Wall Street.

There is a decline of 4 percent in the public sector business that includes orders from local, state and federal governments.

An extended restructuring plan in the company would lead to the termination of 1,100 employees, and it was announced recently. It is in addition to the laying off 5500 declared in August last year. Cisco is expecting to record an additional pre-tax charge in the present quarter of $150 million. The company believes the restructuring plan to get over by the end of first quarter of fiscal 2018.

As on April 2017, the cash and cash equivalents was $8.12 billion, and it decreased from $8.895 during the same period last year.

The company anticipates the revenue to dip low by 4-6 percent on the Y-O-Y (year-on-year) basis or quarter 4. The analysts from Wall Street believe that the income of Cisco would decline by only 1 percent. In addition to this, the market expects the earning for the fourth quarter to be $0.62 per share. Hence, if we consider the weak Q4 outlook and declining revenue, the share prices of Cisco is likely to fall further.

There was a drastic decline in the stock after it failed to cross the significant resistance level of 34 and the Stochastic Oscillator is also making lower highs. As a trader, you can expect the correction to continue. The next known support for the stock is at 30.

Cisco Stock Price May 22nd, 2017

Cisco Stock Price May 22nd, 2017

You need to BUY a PUT Option for creating a SHORT position in the Binary Options market. You need to set the expiry period of the trade to be around 1st of June and strike price is recommended at 32.50.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.

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