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What’s happening: Shares of Cisco Systems fell on Thursday, after the company released results for its second quarter.
What happened: The networking equipment maker posted better-than-expected earnings for its latest quarter on Wednesday.
However, Cisco issued a weak forecast for the year and announced plans to cut several jobs.
How were the results: The San Jose, California-based company reported the first decline in sales in three years for its fiscal second quarter ended January 27.
Why it matters: Tech companies have announced around 35,000 job cuts this year amid a slowdown in corporate IT spending.
The company confirmed a restructuring plan that will reduce around 5% of its global workforce, or over 4,000 jobs, recognizing around $800 million in pre-tax charges.
Following a 12% contraction in orders in the fiscal second quarter, the company is planning restructuring and layoffs to focus on high-growth areas, like AI.
“We continue to align our investments to future growth opportunities. Our innovation sits at the centre of an increasingly connected ecosystem and will play a critical role as our customers adopt AI and secure their organisations,” CEO Chuck Robbins said.
Cisco also increased its quarterly dividend per share by 3% to 40 cents per share, payable on April 24, 2024.
Management guided to revenues between $12.1 billion and $12.3 billion for the fiscal third quarter, below market estimates of $13.09 billion. They projected earnings between 84 cents and 86 cents per share, significantly lower than market expectations of 92 cents per share.
For the full year 2024, the company lowered its revenue guidance to between $51.5 billion and $52.5 billion, from $53.8 billion to $55 billion. It projected earnings between $3.68 and $3.74 per share.
How shares responded: Cisco’s shares fell 2.4% to close at $49.06 on Thursday, following the release of quarterly results. The stock has lost around 7% over the past six months.
What to watch: Investors will continue monitoring the company’s increased spending on AI. Earlier this month, Cisco announced a partnership with chipmaker Nvidia to help in the development of corporate AI computing infrastructures.
Context: The EUR/USD forex pair rose on Thursday, as investors digested the latest economic data.
Details: The euro traded above the $1.07 level on Thursday, after dipping to a three-month low of $1.0693 on February 14.
The Eurozone recorded a trade surplus of €16.8 billion in December, versus a deficit of €8.5 billion in the year-ago period. The latest reading came in lower than market estimates of a €21.5 billion surplus, as imports contracted by 18.7% to the weakest level since August 2021 and exports fell by 8.8% to an eight-month low.
Spain’s consumer price inflation accelerated to a three-month high of 3.4% year-over-year in January.
The European Commission slashed the Eurozone’s growth forecast for 2024 by 0.4 percentage points to 0.8%. All countries in the region are still expected to expand in 2024, with Germany projected to grow 0.3% and France seen expanding by 0.9%.
Meanwhile, the region’s inflation outlook was revised lower, with headline inflation seen easing to 2.7% in 2024 and falling further to 2.2% in 2025, closer to the ECB’s target of 2.0%.
The EUR/USD forex pair gained around 0.4% to 1.0773, while the EUR/GBP pair added more than 0.1% to reach 0.8550 on Thursday.
What to watch: Investors await the release of economic data on Germany’s wholesale prices and France’s consumer price inflation today. Analysts expect wholesale prices in Germany to increase 0.3% in January, following a 0.6% decline in December. France’s consumer price inflation is projected to ease to 3.1% year-over-year in January, from 3.7% in the prior month.
Other Markets: US trading indices closed higher on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.91%, 0.58% and 0.21%.
Ukraine’s President Volodymyr Zelenskyy will travel to Germany and France on Friday to sign bilateral security agreements with each country. The news sent the RUB/USD pair lower in forex trading this morning.
New Zealand’s BusinessNZ performance of manufacturing index rose to 47.3 in January, from 43.1 in the earlier month. Manufacturing activity remaining in the contractionary zone for the eleventh consecutive month exerted pressure on the NZD/USD forex pair.
South Korea’s import prices increased by 0.2% year-over-year in January, versus a 4.1% decline in the prior month, sending the KRW/USD pair lower this morning.
Colombia’s gross domestic product rose by 0.3% year-over-year in the fourth quarter, compared to a 0.6% contraction in the prior quarter, which lent support to the COP/USD forex pair.
Indonesia’s retail sales grew by 0.2% year-over-year in December, slowing from a 2.1% increase in the earlier month, which sent the IDR/USD pair lower in forex trading this morning.
UK’s retail sales, Russia’s interest rate decision, India’s foreign exchange reserves, Canada’s wholesale sales and foreign investment in Canadian securities, US Building permits, producer price inflation, housing starts, University of Michigan consumer sentiment, Baker Hughes crude oil rigs and Baker Hughes total rigs, Argentina’s interest rate decision, as well as Russia’s GDP growth rate.
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