Cisco Systems Inc on Wednesday raised its full-year earnings forecast and reported quarterly revenue above expectations on strong demand for its enterprise communication tools and 5G gear. Shares of the company rose about 5% in extended trading after the networking giant announced a $15 billion increase to its stock repurchase program.
The company, which sells routers, switches, security services and software products, has been heavily investing in its cloud offerings to keep up with the pandemic-fueled surge in demand for its videoconferencing platform Webex, virtual private network and cybersecurity products.
“We continue to see incredibly strong demand across our portfolio… Our robust order strength, record backlog and double-digit growth in annual recurring revenue position us well to deliver growth,” Chief Executive Officer Chuck Robbins said.
The company is also making new deals and acquisitions to build its software business as the scope for a hybrid-work model grows.
It’s reportedly making a $20 billion bid for Splunk Inc, which makes software for searching and monitoring big data gathered from various sources such as websites, applications and devices.
“(The buyback) perhaps signals that Splunk is not going to happen because if they’re giving $15 billion back, I would think they’re not going to spend $20 billion on a company,” said Scott Raynovich, principal analyst at Futuriom.
Cisco forecast fiscal 2022 adjusted earnings between $3.41 and $3.46 per share, compared with its prior projection of $3.38 and $3.45.
Revenue is expected to grow between 5.5% and 6.5%, tighter than its prior forecast of 5% to 7%.
For the second-quarter revenue rose about 6% to $12.72 billion, above estimates of $12.65 billion, according to IBES data from Refinitiv.
On an adjusted basis, Cisco earned 84 cents, 3 cents above estimates.
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