Cisco shares drop after earnings report as revenue continues to decline

Cisco shares remained relatively flat in extended trading on Wednesday after the company reported fiscal second-quarter results that beat analysts’ estimates.

Here are the key numbers:

• Earnings: 77 cents per share, excluding certain items, vs. 76 cents per share as expected by analysts, according to Refinitiv.
• Revenue: $12.01 billion, vs. $11.98 billion as expected by analysts, according to Refinitiv.

Cisco remains the dominant player in the data center switch market, but the company has for years been mired in slow growth because the bulk of new spending in IT is going to the large cloud vendors rather than the legacy hardware manufacturers.

“I am incredibly proud of the innovation our teams continue to drive,” CEO Chuck Robbins said in a statement. “I am confident in our long-term growth opportunities as we help our customers build out the networks for the future.”

The company said it expects 79 cents to 81 cents in earnings per share, excluding certain, and an annualized revenue decline of 1.5% to 3.5% in the fiscal third quarter.

Revenue for Cisco’s two largest business segments, Infrastructure Platforms and Applications, were both down 8% year over year, coming in at $6.5 billion and $1.3 billion, respectively. 

Cisco’s stock has gained just 5% in the past year, trailing the nearly 22% gain for the S&P 500 and even further behind the performance of Amazon, Microsoft and Alphabet.

CEO Chuck Robbins told CNBC in November that large customers are pausing spending plans because of global economic uncertainties related to Brexit and the U.S.-China trade deal. In Davos last month, at the World Economic Forum, Robbins said in an interview that while the domestic economy is strong, “we’ve also seen other indicators that outside the U.S. it’s a little more sluggish.”

WATCH: CNBC’S interview with Cisco CEO Chuck Robbins