Cisco Profits Climb, Stock Plunges on 4Q Results
Cisco's profits climbed 80 percent in its fourth quarter but its sales missed analysts' estimates, causing the company's stock to fall more than 9 percent in morning trading.
The company posted fourth-quarter revenue of $10.8 billion in its earnings results yesterday, coming short of the sales forecast by Thompson Reuters analysts despite rising 27 percent over last year.
Jittery investors, already shaken by troubling jobless data reported by the Labor Department, sent Cisco's stock falling in after-market trading yesterday.
The decline continued this morning, with Cisco's stock plunging more than 9.5 percent by 9:30 a.m. Central in NASDAQ trading. The NASDAQ index itself was down more than 20 percent this morning on shaky economic news.
In an earnings call with analysts, Cisco CEO John Chambers said the company was getting mixed signals about the state of the global economy.
"We are seeing a large number of mixed signals in both the market and from our customer's expectations," he said. "We think the words unusual and uncertainty are an accurate description of what is occurring."
Chambers said he expected sales to rise between 18 percent and 20 percent next quarter but cautioned investors to be conservative, especially in the short term.
A marked rise in Cisco's profits was a departure from the doom and gloom surrounding the state of the global economy. The company's net income rose to $1.9 billion in the fourth quarter, a 79 percent increase over last year. For the full year 2010, Cisco made $7.8 billion on sales of $40 billion.
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