Cisco Reports Impressive Fiscal 2018 Q1 Earnings

CiscoThe popular network hardware manufacturing company Cisco Systems Inc (NASDAQ: CSCO) has surprised everyone on November 16, 2017, by registering an impressive 1st quarter earnings in fiscal 2018. The earnings easily surpassed the expectations of the analysts. In fact, the revenues earned for the quarter met the estimates of Zacks Consensus. The company issued an impressive guidance for the 2nd quarter.

As a result of the impressive results posted by the company, the stocks rose to a 12 months high figure of $36.97. We are hoping for a rally in the coming days and the reason for the same is discussed below.

This San Jose California based company registered GAAP net income of $2.4 billion or $0.48 per share on total revenues worth $12.1 billion in Q1 of fiscal 2018.

During the same quarter last year, CISCO reported a GAAP net income of $2.3 billion or $0.46 per share on total revenues of $12.40 billion. The market analysts at Wall Street expected the company to post revenues of $12.11 billion.

If we exclude charges, the non-GAAP net income for Q1 2018 was $3 billion or $0.61 per share as compared to $3.1 billion or $0.61 per share in Q1 2018 but more than the estimates of Zacks Consensus of $0.60 per share. There was a negative impact on the overall earnings due to the acquisitions made by the company during that same quarter.

Cisco

There was a decline in product revenue to $9.054 billion in 3 months ended on October 28, 2017, from $9.302 billion during the same period. There are 4 units in the product segment namely Security, Applications, Infrastructure Platforms and Other Products.

    Security segment posted revenues worth $585 million with a yearly increase of 8%

    Application segment registered revenues of $1.203 billion with 6% yearly growth

    Infrastructure segment that comprises Wireless and Data Center Solutions, Switching and NGN Routing registered revenues of $6.970 billion with a yearly decline of 4%

    Other products registered revenues of $296 million with a yearly decline of 16%

Revenues in the service sector grew from $3.050 billion to $3.082 billion within 12 months. 32% of the total revenues were recurring in nature. It is to be noted that subscription revenues comprise 52% of the software revenues with a yearly increase of 12 percent. The company accepted that ongoing transition to subscription-based business would result in a slowdown in revenues in the coming time but the management is hopeful of reaping its rewards in due course of time.

There is a contraction of 150 bps in non-GAAP gross margin from earlier year to 63.7 percent and it is due to declining of 180 bps in product margin. With the quarter ending in October 2017, the company is having cash and cash equivalents of approximately $71.60 billion. During that quarter, Cisco acquired Viptela, Springpath and Observable Networks.

The company has announced to acquire Perspica that provides service in data processing technology and machine learning. Cisco also intends to buy BroadSoft for a whopping $1.90 billion.

The company recently launched Cisco Intersight which is a management and automation platform. It has also launched subscription portfolio offers which are known as Business Critical and High-Value Services that makes use of artificial intelligence to predict IT fiascos in future.

The company is hoping a growth of 1-3 percent in its revenues for the fiscal year 2018 during the 2nd quarter. Cisco is hoping for non-GAAP earnings in the range of $0.58-$0.60 per share. The estimate of Zacks earnings is at $0.58 per share on total revenues of $11.73 billion in Q2. Hence, the stocks of the company are likely to remain bullish due to an impressive performance in Q2 and transition to a subscription-based model.

Cisco Stock Price Nov 28th 2017

Cisco Stock Price Nov 28th, 2017

The price chart is showing consolidation at 36 levels. Also, the Stochastic Oscillator is in a bullish zone. Hence, the stocks are likely to rise up in prices in the near future.

Traders are advised to invest in a CALL Option based on this current trend. For people interested in the trade, they should select a strike price around $36 and set the expiry date around December 7, 2017.

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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