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Cisco Rallies On Earnings Beat As It Sits On $45B In Cash; Guidance In Line With Estimtes

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Cisco CEO John Chambers - Image credit: Getty Images via @daylife

UPDATE - 5:01 pm: Cisco's management gave guidance during the conference call that fell within expectations.  Fiscal second quarter revenues are forecast to grow between 3.5% and 5.5% by the company, compared to a 5.2% consensus estimate.  Non-GAAP EPS should come in between 47 and 48 cents, while Wall Street called for 48 cents.  Gross margin should be between 61% and 62% (estimate was 61%).

The stock continued its afterhours rally, trading up 7.7% to $18.15.

Cisco posted first quarter earnings after the bell on Tuesday, beating top- and bottom-line estimates on what chief executive John Chambers called a “record” quarter.  The company revealed a $45 billion cash pile and net margin of 60.95%, just down from 61.2% a year ago.

Net income grew 11% on a non-GAAP basis to $2.6 billion, translating to an adjusted EPS of 48 cents, two cents above the consensus estimate.

Revenue grew 6% to $11.9 billion, also inching above Wall Street’s forecast which called for $11.8 billion.  The company saw its net margin slide marginally to 60.95%, and announced it spent approximately $1 billion in dividends and share buybacks through their fiscal first quarter.

"We delivered record results this quarter -- with revenue growth of 6 percent and strong earnings per share growth -- demonstrating our vision and strategy are working," said John Chambers, chairman and chief executive officer, Cisco.  “[We are] at the center of the major market transitions -- cloud, mobility, video -- and yet we believe the largest market transition lies ahead of us, as the Internet of Everything becomes a reality."

Cisco also revealed a pretty hefty cash pile.  The company headed by Chambers is sitting on $45 billion, just down from the $48.7 billion it had a year ago.

It’s been a difficult last couple of months for the tech sector, with the Nasdaq down approximately 9% over the last three months.  Apple, the U.S.’ biggest publicly traded company, has done even worse, falling 14% in the time frame, while Google remained flat.  Names like IBM and Oracle are down between 4% and 5%.

Investors seemed pleased with Cisco’s financial performance.  After closing the day essentially flat, the stock took off in early after hours trading, rallying 6.1% to $17.87 by 4:22 PM in New York.