Cisco Gives Upbeat Outlook as Chip Supply Shortages Ease

The biggest maker of machines that run the internet and corporate computer networks gave a bullish forecast for the quarter as chip supply shortages ease

In the first quarter of the fiscal year, revenue is expected to increase 2% to 4%. Analysts had predicted that sales wouldn't change much from a year ago. The company expects sales to increase by as much as six percent.

The shares increased in late trading.

The outlook shows that the economy and tech spending can weather a shaky economy. The company told investors and analysts that it was not able to fulfill all of its orders because of shortages of parts caused by the Pandemic. More of the demand can be converted into sales now that the holdups are gone.

"Total revenue exceeded our expectations in Q4 as a result of our strong execution and the numerous initiatives we have taken to reduce the impact of the global supply situation," said CFO Scott Herren.

Even though there are signs of a downturn, there are still chip shortages.

The revenue growth may not be enough to make up for the profit shortfall. Excluding certain items, the profit will be between 81 and 84 cents. Earnings for the year will be between $3.50 and $3.56. The average estimate for the quarter was 84 cents and for the year was $3.54

The investors are interested in the company's order rates. The company said that growth increased to 15% in the fourth quarter. After a run of quarters were over 30%, the increase slowed to just 8% in the third period.

The concerns have reflected on the stock performance ofCisco. The onetime king of Silicon Valley has given up more than a third of its market cap in the next four years.

New hardware and software, as well as new services provided over the internet, are what Chuck Robbins has been attempting to spur growth with. Rather than focusing on networking equipment, the goal is to pursue more sources of revenue.

The unit that contains hardware shrunk in the third quarter. The security business sells internet-based services.

There was no change in revenue in the three months ended in July. Earnings per share were 83 cents. Sales were expected to be $12.7 billion and profit was expected to be 81 cents.