Cisco predicts third-quarter revenue fall in line with Wall Street view

Wed Feb 12, 2014 5:31pm EST

A Cisco office is pictured in San Diego, California November 12, 2012. REUTERS/Mike Blake

A Cisco office is pictured in San Diego, California November 12, 2012.

Credit: Reuters/Mike Blake

(Reuters) - Cisco Systems Inc (CSCO.O) on Wednesday forecast a 6 to 8 percent revenue slide this quarter, roughly in line with Wall Street expectations, as the network gear maker struggles with sluggish emerging markets like China.

The outlook marks another severe decline in sales for the former high-flying tech company, which has blamed its poor run on a boycott of U.S. equipment after revelations of American spying efforts globally.

Cisco's outlook for the fiscal third quarter ending April translates to a forecast for revenue of between $11.2 billion and $11.5 billion, versus the $11.3 billion analysts expect on average.

Shares in the company slipped 4.3 percent to $21.89 in extended trade, from a $22.85 close on the Nasdaq.

In the second quarter, revenue from routers and switching equipment, which together make up slightly more than half of the company's overall revenue, both contracted more than 10 percent.

The company reported revenue of $11.2 billion in its second fiscal quarter, down from $12.1 billion a year earlier. Wall Street on average expected Cisco to report of $11.03 billion, according to Thomson Reuters I/B/E/S.

Asia Pacific sales fell 4 percent to $1.8 billion in the fiscal second quarter ended January. But revenue in the Americas led declines, with a 9 percent fall in the quarter.

"They put a pretty low bar for the second quarter. They reached their numbers on the reset. It shows the environment has stabilized," said Zeus Kerravalla at ZK research.

Cisco reported non-GAAP earnings of 47 cents per share in the second quarter, a penny better than the 46 cents expected.

"The strong quarter is usually the fourth quarter and they have some product transitions to go through. I am curious to see how emerging markets did," Kerravalla said.

(Reporting by Nicola Leske; Editing by Cynthia Osterman)

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