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Cisco stock slightly drops as earnings barely edge over estimates

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Cisco Stock News

Cisco Systems, Inc. (NASDAQ: CSCO) reported its second fiscal quarter earnings with results slightly edging Wall Street estimates but offering weak guidance. Although Cisco’s stock has gained 5% during the last 12 months, that is still significantly lower than the 22% gain of the S&P 500. The reason for that may be the hesitation in customer spending due to macroeconomic uncertainty. Analysts are not seeing anything wrong here, and they are feeling positive about Cisco’s coming quarters.

Last quarter results

Revenues were $12.01 billion compared to $11.98 billion which was expected by analysts. However, that is still down 4% from last year. This had an effect on shares, so their price went down 6.4% to $46.72 at 11:03 a.m. Thursday. The stock gained 1.6% on Wednesday. Earning were 77 cents per share, excluding certain items, compared to 76 cents per shared, in line with analysts’ expectations. Cisco’s two main business segments achieved both 8% lower revenues over the year (Infrastructure Platforms $6.5 billion and Applications 1.3 billion).

For Cisco’s fiscal second quarter revenues, guidance range did see a decrease between 3% and 5%, so achieved 4% decrease came right in the center. Similar applies to adjusted earnings per share – guidance range was 75-77 cents: analysts expected 76 cents whereas Cisco achieved 77 cents per share. If we break it down for a more detailed view, we can see that revenue from products fell 6%, while revenue from services rose 5%. Having in mind that Cisco is a significant player in the networking-hardware industry, increase of service revenues is a good sign of adjustment and positioning in the cloud environment. And on the bright side, since services were up, gross margin was also up to 64.7%, while it was 62.5% in previous year.

Cisco in cloud

Cisco is positioned as the dominant player in the data center switch market. But the whole data center switch market suffers from slow or zero growth due to many enterprises and customers deciding to turn to cloud providers, so they can avoid associated infrastructure, management, and technical concerns. Cisco’s strategy lies in Cisco cloud providers, which are offering enterprise customers unique cloud solutions, whether the solution is public, private, hybrid, consuming services, or integrating multiple clouds together. Then again, the two largest players, Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) are setting the bar quite high above clouds when it comes to this market. And the cloud war between the two is far from over as Amazon just managed to prolong the JEDI saga by having a judge suspend the contract from moving forward until the lawsuit is resolved. There’s no doubt that Amazon’s AWS is the leading cloud provider, but Pentagon saw more potential in Microsoft which is posting beyond strong growth in the recent quarters. So the JEDI wars are far from over!

Outlook

As for the expected results for the quarter ending in April, revenue decrease is expected to be continued for 1.5% to 3.5% compared to the year earlier. So, expected revenue should be within the range of $12.5 billion to $12.8 billion. Decrease is due to fact that orders were down with EMEA down 1% as it was mainly affected by a higher decrease in the U.K. public sector due to Brexit and the America segment down 8% while U.S. has a slightly smaller drop. In total, this is still an increase compared to the latest quarter (second fiscal quarter). Similar applies to profits as Cisco expects 79-81 cents a share on an adjusted basis. Quarterly non-GAAP gross margin is expected within a range 64.5%-65.5%.

As for the scary Coronavirus, Cisco’s CFO Kelly Kramer said that the possible impact of the outbreak was not really taken into account while deriving the guidance figures. Considering that Cisco relies on manufacturers located in China, there could be something to fear.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Electric Vehicles Are on Fire

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The incoming Biden administration is planning to pump $2 trillion into renewable energy infrastructure and EVs play a big role in a greener future. Shares of largest EVs are still going up even after epic gains in 2020. Nio’s (NYSE:NIO) stock rose about 6 percent on Friday and it is now the world’s fifth most valuable carmaker with market value of approximately $100 billion. Moreover, three of the top five most valuable automakers are EV makers, namely Tesla (NASDAQ: TSLA), BYD (OTC: BYDDF) and NIO Limited.

Tesla has gained over 700% in a year, while Chinese Nio has soared over 1,300%.  Larger EV firms are going up, Lordstown Motors (NASDAQ: RIDE), Workhorse (NASDAQ: WKHS) and CIIC Merger (NASDAQ: CIIC) which is merging with Arrival that is soon to be listed as ARVL on the NASDAQ are all up 9% on average. Arrival plans to have its electric buses in production by the end of this year with electric commercial vans to follow in 2022.

Small caps

But small caps are rising as well with Electramecania Vehicles (NASDAQ: SOLO), Greenpower Motor (NASDAQ: GP), Kandi Technologies (NASDAQ: KNDI) and Arcimoto (NASDAQ: FUV) combined having a market cap of approximately $2.6 billion.

Worksport

The manufacturer of solar-powered tonneau covers for pickup trucks, Worksport Ltd (OTC: WKSP) just announced it raised well over $2 million from its Regulation A public offering. The offering can remain open until November 2021 but the company already achieved 50% of the target amount, with its first million being reported earlier this month. The capital raised is to be used for expeditious growth, R&D, inventory and brand development. Management is also considering acquisitions and partnerships to fuel additional growth. As a reminder, Worksport recently added another trademark protection for its TerraVis COR™ mobile battery system under its belt. Although it is an extension of TerraVis solarsystem, it can be used independently from tonneau covers. Worksport is not only the first in the industry with its ground-breaking solar technology, but it has now also opened another door for consumers.

Rivian

Rivian Automotive LLC just scored another huge cash investment of $2.65 billion and is now valued at $27.6 billion. Being backed by Ford (NYSE: F) who invested $500 million and supported by Amazon (NASDAQ: AMZN) for which it is making electric vans, Rivian is on a roll as it plans to bring the first electric pickup truck to the market. Rivian has racked up billions of dollars in investments and its R1T electric pickup truck and R1S three-row SUV have already proved their impressive specs in testing road trips across multiple countries.

The EV sector is up about 17% year to date on average, adding about $220 billion in market value, which is roughly the market cap of Toyota Motor (NYSE:TM). It doesn’t seem to matter if companies are small or large, EV exposure is what investors want.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Apple’s First Ever $100 Billion Quarter

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On the wings of iPhone 12 sales, Apple (NASDAQ: APPL) delivered its first and largest quarter of all time, crossing the symbolic 100 billion mark in one quarter. This is the YoY increase of sales for 21%. This is the company’s first quarter after introducing iPhone 12 family (the iPhone 12 mini, the iPhone 12, the iPhone 12 Pro, and the iPhone 12 Pro Max). But not only iPhone sales went up. Every other Apple’s product category showed an increase in double-digit percentages. Still, the main culprits for this sale super-cycle are the first 5G iPhone and the lockdown, so many consumers which held their older phones for some time just waited for the moment to upgrade to the latest mobile connectivity technology.

Q1 2021 results

In its fiscal Q1 2021, Apple managed to achieve revenues of $111.44 billion, instead of the estimated $103.28 billion. This is an increase of 21% YoY. Even the later start of sale of iPhone 12 and the closing of several retail locations due to the COVID-19 pandemic could not harm the all-time high iPhone sales that amounted to $65.6 billion. The previous record was achieved in the fiscal Q1 of 2018, when the iPhone sales reached $61.58 billion. Earnings per share were $1.68, while the estimate was $1.41. All other product categories also performed well. Service revenues were up 24% YoY, iPad revenues increased 41%, Mac revenues hopped 21%, and the story goes on. The gross margin was 39.8% which is much better than the expected 38%.

Facebook

Facebook (NASDAQ: FB) also delivered earnings beat with its fourth quarter results but the social media giant warned of impact from Apple privacy changes that are part of the iOS14 package. These looming changes along with a reversal in pandemic trends could harm its advertising business. Although its userbase in Europe increased from 305 million to 308 million daily active users, it fell In the U.S. and Canada, to 195 million daily active users from 196 million a quarter earlier which is why the company will be taking steps to reduce the political content on its platform.

Outlook

Although Apple did provide any guidance for the undergoing quarter, this has been the case since the pandemic started. Even with the lack of forecasts, the results speak for themselves. As its FAANG and tech peers, Apple had benefited from the pandemic as more and more people had to work or study from home. Not to mention that new Apple products don’t come that often and the pandemic has taken away a lot of pleasures we get to enjoy in, so Apple is well set to ride this super sale wave.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Working From Home Trend and Gaming Did The Trick for Microsoft

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On Tuesday, Microsoft (NASDAQ: MSFT) succeeded in beating forecasts far above expectations due to a boom in PC sales, increased demand for gaming and cloud services. The pandemic might have put a lot of constraints to its customers, but it also led to a structural change as businesses across the globe shifted to digital operations and saw it as key to increasing their resilience. Upon the results, Microsoft’s stock was up 5% in after-market trading.

Q2 2021 figures

Revenues increased 17percent as they amounted to $43.1 billion and exceeded $40.2 billion expected by Bloomberg. Earnings per share were $2.03, topping the expected $1.64.

The commercial cloud businesses which Wall Street sees as the main engine of Microsoft’s future growth is reaccelerating. These businesses that include Office 365 and Azure cloud platform, generated revenue of $16.7 billion in the latest quarter, which is 34 per cent up from a year before. At the same time, the launch of a new Xbox Series S and Xbox Series X lifted the gaming business as revenue of Xbox content and services was up a whopping 40% in the quarter. Personal Computing division was also up by 14 per cent as revenues amounted to $15.1 billion.

Meanwhile, the Productivity and Business Processes division reported revenue of $13.4 billion, which is a 13 percent increase. This growth was fueled by strong demand for Office 365 which grew 20 percent when adjusted for currency, which is line with the previous quarter.

Adding more fuel

Microsoft recently announced that it was investing $2 billion to be the preferred cloud provider of the General Motors (NYSE: GM) and Honda-backed (NYSE: HMC) autonomous vehicle firm Cruise. Under the agreement, Microsoft will provide cloud infrastructure for Cruise to better enable autonomous vehicles to navigate highways and surface streets in the future.

A sign of confidence

Microsoft also forecast revenue for the current quarter in the range between$40.35billion and $41.25bn. Themidpoint of the rangewould represent another quarter of 17 per cent growth, beating the 11 per cent that Wall Street forecasted.

Takeaway

Its strength in the cloud and personal computing enabled Microsoft to blow away Q2 expectations. As Mr. Nadella had put it, digital transformation is sweeping every company and every industry across the globe. Microsoft is powering this second wave of transformation that is even stronger than the first one as the world is now creating a new normal that will stay long after the COVID-19 pandemic becomes history.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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