Cisco shares under pressure despite sales jump

(Sharecast News) - Shares in Cisco Systems fell sharply on Thursday, after quarterly numbers from the US networking equipment giant failed to win over investors. Posting second-quarter numbers after the close on Wednesday, Cisco said revenues rose 10% in the three months to 24 January to $15.35bn, topping consensus for $15.12bn. Net income was also higher, rising to $3.18bn from $2.43bn.

However, the adjusted gross margin missed market expectations, as the rapid build-out of high-margin artificial intelligence infrastructure caused global demand for memory chips to spike and prices to jump.

As at 1245 GMT, the stock had shed 7% in pre-market trading.

Chuck Robbins, Cisco chief executive, said it had been a strong second quarter and first half.

"With over 40 years of customer trust, global scale and a relentless focus on innovation, we believe Cisco is uniquely positioned to deliver the trusted infrastructure needed to securely and confidently power the AI-era.

"We see strong, broad-based demand for our technology solutions and remain focused on capturing the significant opportunities we see ahead."

Looking to the current quarter, and Cisco said it expected adjusted EPS to come in between $1.02 and $1.04 on revenues ranging from $15.4bn to $15.6bn.