Cisco Systems Inc.'s second-quarter profit matched Wall Street’s subdued expectations, but shares of the world’s largest Internet networking supplier plunged Wednesday on signs of a sales growth slowdown.
The company’s guidance of 10% sales growth in the fiscal third quarter fell below the 15% projection by analysts.
The forecast disappointed investors, who viewed it as a sign that technology spending would continue to weaken as companies girded for a possible recession.
Cisco executives acknowledged many companies were being cautious about investing in new Internet equipment, but they predicted that growth would soon pick up again, helped by surging demand in emerging markets.
Cisco shares sank on the gloomy outlook, falling $1.77, or nearly 8%, to $21.31 in after-hours trading. They had slipped 18 cents to close at $23.08 during the regular trading session, before the results were released.
Investors have punished Cisco’s stock severely during the last four months on fears the San Jose-based company isn’t as well insulated from U.S. economic pressures as previously thought.
Cisco said Wednesday that its net income was $2.06 billion, or 33 cents a share, during the three months ended Jan. 26. That’s 7% higher than its profit of $1.92 billion, or 31 cents, during the same period a year earlier.
Excluding one-time charges, Cisco made a profit of 38 cents a share, matching the figure predicted by analysts polled by Thomson Financial.
Sales climbed more than 16% during the latest period to $9.83 billion from $8.44 billion. Analysts were expecting $9.8 billion in sales.