Cisco offers poor forecasts for the coming year. The arrow is slipping.

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Cisco

Stocks fell in late trading on Wednesday, after the networking giant’s forecast for the 2024 fiscal year fell short of Wall Street’s estimates.

Results for the company’s fourth fiscal quarter ending in July exceeded the company’s expectations for both revenue and earnings.

The stock fell 1.8% in late trade shortly after the report was released.

This is breaking news. Read a preview of Cisco’s earnings below and check back for more analysis soon.

While Cisco (stock ticker: CSCO) shares are up about 13% since the company’s last earnings report in May, recent results from other networking hardware providers for both telcos and cloud computing giants have been decidedly mixed. The stock is up 12% so far this year.

Cisco faces heavy demand as the networking equipment company nears its fiscal fourth-quarter earnings report after the close of trading on Wednesday. Soft orders from cloud and telecom customers are likely to offset strong enterprise sales.

Last month, shares of both

Nokia

(NOK) and

Ericsson

Eric fell after companies warned that the spending outlook for US airlines looked weak in the second half. Nokia blamed the “macroeconomic environment and customer inventory digestion”.

a few weeks later,

Juniper Networks

JNPR shares fell after the company warned it was seeing weak bookings activity, particularly from cloud customers. Juniper blamed the same factors Nokia cited: economic issues and high customer inventories.

It was better in

Arista Networks

(ANET), which published strong quarterly results in June, though Arista warned it was seeing a “return to shorter lead times and reduced visibility.”

Cisco faces a volatile environment, “with peers indicating an uptake period for telecom and cloud customers,” Amit Daryanani, an analyst at Evercore ISI, wrote in a note reviewing the quarter, offset by strong demand from other large companies. He also notes that Cisco’s results should give Wall Street its first look at the demand outlook in 2024.

Cisco stock is often pummeled by management’s comments on orders and backlogs, which have worked against the company lately. Orders fell 23% in the April quarter, after declining 22% in the January quarter. The company exited the April quarter With what Cisco says is double its normal backlog, after backlogs of orders during the recent component shortages.

Daryanani says institutional investors have been looking for orders to drop by a percentage in the low to mid-teens from a year ago. It has maintained its outperformance rating and $60 target on the stock.

For the quarter, Cisco’s guidance calls for revenue growth of 14% to 16%, with non-GAAP earnings of $1.05 to $1.07 per share. Street consensus on revenue of $15.05 billion, up 14.9% from a year earlier, on earnings of $1.06 per share. Estimates put product revenue at $11.5 billion, up 18.6%, with services revenue at $3.5 billion, up 3.5%.

For the first fiscal quarter, which ends in October, Street estimates sales of $14.6 billion, up 7%, with earnings of $1 per share. For fiscal year July 2024, analysts expect revenue of $58.3 billion, up 3% from $56.8 billion in fiscal 2023.

Write to Eric J. Savitz at [email protected]