Cisco CEO Chuck Robbins on Q1 earnings, remote work, outlook and more

Cisco Systems Inc. on Thursday reported fiscal first-quarter net income of $2.17 billion. The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of 71 cents per share. Cisco CEO Chuck Robbins joins "Squawk on the Street" to discuss the highlights of the report as what he sees for the company going forward as the pandemic shows no sign of slowing down. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Cisco shares moved as much as 9% higher in extended trading on Thursday after the company reported fiscal first-quarter earnings and an upbeat forecast that exceeded analysts’ expectations.

Here’s how the company did:

Earnings: 76 cents per share, adjusted, vs. 70 cents per share as expected by analysts, according to Refinitiv.
Revenue: $11.93 billion, vs. 11.85 billion as expected by analysts, according to Refinitiv.
With respect to guidance, Cisco said it sees 74 cents to 76 cents in adjusted per share and a 2% revenue decline to flat revenue in the fiscal second quarter. Analysts polled by Refinitiv had expected 73 cents in adjusted earnings per share and $11.63 billion in revenue, which implies a 3% revenue decline for the period.

Overall, Cisco’s revenue declined 9% on an annualized basis in the quarter, according to a statement, in line with the 9% decline in the previous quarter. Revenue has now fallen four quarters in a row. The coronavirus pandemic and recession continued to challenge Cisco as much of its revenue still comes from sales of equipment for corporate and government data centers and offices, while spending on cloud services has increased as people work from home.

Cisco saw a 5% increase in public sector orders year over year in the quarter, while orders were down in enterprise, commercial and service provider segments. Stimulus spending boosted government orders in the U.S. and abroad, Cisco CEO Chuck Robbins told analysts on a conference call.

“What I kind of was hopeful was going to happen which I think we did see this is that we had customers who were super focused on getting their employees working from home properly and getting their security set up,” Robbins said. “I think everyone raced to do that, and then I think they took a pause, which is what we felt in our last quarter in orders, and then I think they reprioritized what they were going to be spending money on, and I think we started seeing some of that come back.”

Cisco’s Infrastructure Platforms segment, which includes data center networking switches, delivered $6.34 billion in revenue, down 16% year over year and below the consensus of $6.45 billion among analysts polled by FactSet. It’s the largest part of Cisco’s business by revenue, and it’s the one that’s most impacted by the virus.

The Applications business, which contains the Webex video-calling service and the AppDynamics monitoring software, contributed $1.38 billion in revenue, which is down 8% and slightly less than the FactSet consensus of $1.40 billion.

Cisco said Scott Herren, chief financial officer of Autodesk for the past six years, will be the replacement for Kelly Kramer, Cisco’s chief financial officer, whose retirement was announced in August. Kramer “was very supportive on the decision for Scott,” Robbins said.

In the quarter Cisco announced a goal of increasing Black representation among executive ranks by 75% by 2023. Also in the quarter Cisco acquired BabbleLabs, a company with software that can improve call quality and announced Webex software enhancements.

As of Thursday’s close, Cisco shares had fallen about 20% so far this year, while the S&P 500 had gone up 9% over the same period.

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