Cisco (CSCO) Shares Fall on Ho-Hum Q3, Weak Guidance

May 9, 2012 4:51 PM EDT
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Cisco Systems, Inc. (NASDAQ: CSCO) posted solid third-quarter results after the close Wednesday, but investors are selling the shares as the networking giant provided nothing compelling.

The company reported net sales of $11.6 billion in the quarter, a rise of 7 percent from last year and slightly better than the consensus of $11.58 billion.

Third-quarter GAAP net income rose 20 percent to $2.2 billion, while non-GAAP net income was $2.6 billion, an 11 percent rise. Non-GAAP EPS grew 14 percent to $0.48, $0.01 better than the analyst estimate of $0.47.

Cash flows from operations were $3.0 billion for quarter, versus $3.1 billion for the second quarter and $3.0 billion for the third quarter of last year. Cash and cash equivalents and investments totaled $48.4 billion at the end of the third quarter of fiscal 2012. During the quarter, Cisco repurchased 27 million shares of common stock under its stock repurchase program at an average price of $20.28 per share for an aggregate purchase price of $550 million.

"We delivered solid results this quarter with record revenue and non-GAAP earnings per share," said John Chambers, Cisco chairman and CEO. "We are successfully executing against our long-term strategic plan of growing profit faster than revenue, and in a cautious IT spending environment, we continue to outperform our competitors."

On the company's conference call, a Cisco exec said the company is looking for fourth-quarter sales growth of about 2-5 percent (implying revenue in the range of $11.42-$11.75 billion) and EPS of 44-46 cents. The Street is currently expecting quarterly sales of $11.99 billion and EPS of 49 cents.

Shares of Cisco last traded at $17.25, down nearly 8 percent from the close.

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