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Cisco forecasts growth from software shift, but chip prices pressure profits

By Stephen Nellis and Sinéad Carew (Reuters) - Cisco Systems Inc (NASDAQ:CSCO) on Wednesday forecast that within four years, about half its revenue will come from software and...
Cisco forecasts growth from software shift, but chip prices pressure profits © Reuters. FILE PHOTO: A man passes under a Cisco logo at the Mobile World Congress in Barcelona, Spain February 25, 2019. REUTERS/Sergio Perez/File Photo

By Stephen Nellis and Sinéad Carew

(Reuters) - Cisco Systems Inc (NASDAQ:CSCO) on Wednesday forecast that within four years, about half its revenue will come from software and other recurring sales, but its chief financial officer told Reuters high chip prices in its hardware business will keep pressuring overall profits.

Cisco is the biggest maker of networking gear for data centers and corporate campuses, but it is shifting toward selling recurring subscriptions for software such as its WebEx collaboration service and cybersecurity services.

At an event with Wall Street analysts, Cisco said it believes the portion of its revenue coming from subscriptions will rise from 44% notched for its fiscal 2021 ended July 31 to 50% by fiscal 2025.

The company gave a fiscal 2025 revenue forecast with a midpoint of $62.9 billion, saying it expects a compound annual growth rate of 5% to 7%. Cisco predicted the same growth rate for adjusted profits, targeting a midpoint of $4.07 per share in fiscal 2025.

Cisco shares closed down 0.5% at $57.56 after the event. Piper Sandler analyst James Fish told Reuters that Cisco's outlook implies that profit margins will stay flat, but Wall Street was hoping for margin growth from Cisco's shift to software.

Cisco Chief Financial Officer Scott Herren said the company's software units do have higher margins than its hardware business, but some subscription revenue will also come from services that have lower margins than software.

But Herren said a global shortage of parts such as computing chips, memory chips and even power supplies will pressure gross margins in the company's hardware business, which Cisco also forecasts will keep growing.

"The component shortages that everyone's dealing with right now have led to price increases, and those price increases are going to be with us for quite some time," Herren told Reuters in an interview. "We're a (Taiwan Semiconductor Manufacturing Co) customer, and they did an across the board price increase the range anywhere from 8% to 20%. We are subject to that."

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24-09-2021 15:22:56 (UTC+7)

EUR/USD

1.1733

-0.0003 (-0.03%)

Summary

↑ Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (1)

Sell (10)

EUR/USD

1.1733

-0.0003 (-0.03%)

Summary

↑ Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (1)

Sell (10)

GBP/USD

1.3705

-0.0011 (-0.08%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (4)

Sell (7)

USD/JPY

110.34

+0.04 (+0.04%)

Summary

↑ Sell

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (0)

Sell (9)

AUD/USD

0.7274

-0.0021 (-0.29%)

Summary

Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (4)

Sell (4)

USD/CAD

1.2690

+0.0035 (+0.28%)

Summary

Neutral

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (2)

Sell (4)

EUR/JPY

129.46

+0.01 (+0.01%)

Summary

↑ Sell

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Buy (2)

Sell (10)

Indicators:

Buy (1)

Sell (8)

EUR/CHF

1.0845

+0.0001 (+0.01%)

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↑ Sell

Moving Avg:

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Sell (12)

Indicators:

Buy (0)

Sell (7)

Gold Futures

1,756.75

+6.95 (+0.40%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (8)

Sell (1)

Silver Futures

22.670

-0.009 (-0.04%)

Summary

Neutral

Moving Avg:

Buy (3)

Sell (9)

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Buy (3)

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Copper Futures

4.2200

-0.0110 (-0.26%)

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Sell (12)

Indicators:

Buy (0)

Sell (9)

Crude Oil WTI Futures

73.38

+0.08 (+0.11%)

Summary

Buy

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Indicators:

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Brent Oil Futures

77.49

+0.24 (+0.31%)

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↑ Buy

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Sell (0)

Natural Gas Futures

5.050

+0.074 (+1.49%)

Summary

Neutral

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Indicators:

Buy (2)

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US Coffee C Futures

193.93

+2.95 (+1.54%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (11)

Sell (0)

Euro Stoxx 50

4,154.25

-40.67 (-0.97%)

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Sell (12)

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Sell (9)

S&P 500

4,448.98

+53.34 (+1.21%)

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DAX

15,513.15

-130.82 (-0.84%)

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Sell (8)

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Buy (1)

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FTSE 100

7,047.45

-30.90 (-0.44%)

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↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (7)

Hang Seng

24,130.00

-380.98 (-1.55%)

Summary

Buy

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (6)

Sell (1)

US Small Cap 2000

2,259.80

+41.24 (+1.86%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (7)

IBEX 35

8,840.50

-36.40 (-0.41%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (9)

BASF SE NA O.N.

63.690

-0.230 (-0.36%)

Summary

Buy

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (7)

Sell (2)

Bayer AG NA

46.49

+0.01 (+0.02%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (1)

Sell (9)

Allianz SE VNA O.N.

192.50

+0.98 (+0.51%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (9)

Sell (0)

Adidas AG

278.45

-10.53 (-3.64%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (9)

Deutsche Lufthansa AG

6.203

+0.002 (+0.03%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (8)

Sell (0)

Siemens AG Class N

148.64

-1.58 (-1.05%)

Summary

Buy

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (6)

Sell (0)

Deutsche Bank AG

10.710

+0.055 (+0.52%)

Summary

Neutral

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (3)

Sell (4)

 EUR/USD1.1733↑ Sell
 GBP/USD1.3705↑ Sell
 USD/JPY110.34↑ Sell
 AUD/USD0.7274Sell
 USD/CAD1.2690Neutral
 EUR/JPY129.46↑ Sell
 EUR/CHF1.0845↑ Sell
 Gold1,756.75↑ Buy
 Silver22.670Neutral
 Copper4.2200↑ Sell
 Crude Oil WTI73.38Buy
 Brent Oil77.49↑ Buy
 Natural Gas5.050Neutral
 US Coffee C193.93↑ Buy
 Euro Stoxx 504,154.25↑ Sell
 S&P 5004,448.98↑ Sell
 DAX15,513.15Sell
 FTSE 1007,047.45↑ Sell
 Hang Seng24,130.00Buy
 Small Cap 20002,259.80↑ Sell
 IBEX 358,840.50↑ Sell
 BASF63.690Buy
 Bayer46.49↑ Sell
 Allianz192.50↑ Buy
 Adidas278.45↑ Sell
 Lufthansa6.203↑ Buy
 Siemens AG148.64Buy
 Deutsche Bank AG10.710Neutral
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank5,655/ 5,705
(-20/ -20) # 870
SJC HCM5,640/ 5,705
(-30/ -30) # 870
SJC Hanoi5,640/ 5,707
(-30/ -30) # 872
SJC Danang5,640/ 5,707
(-30/ -30) # 872
SJC Nhatrang5,640/ 5,707
(-30/ -30) # 872
SJC Cantho5,640/ 5,707
(-30/ -30) # 872
Cập nhật 24-09-2021 15:22:58
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ↀ Giá vàng thế giới
$1,755.95+10.140.58%
Live 24 hour Gold Chart
ʘ Giá bán lẻ xăng dầu
Sản phẩmVùng 1Vùng 2
RON 95-IV2149021910
RON 95-II,III2139021810
E5 RON 92-II2014020540
DO 0.05S1602016340
DO 0,001S-V1637016690
Dầu hỏa1508015380
ↂ Giá dầu thô thế giới
WTI$73.32-0.56-0.77%
Brent$77.44-0.9-1.16%
$ Tỷ giá Vietcombank
Ngoại tệMua vàoBán ra
USD22.630,0022.860,00
EUR26.044,7927.400,28
GBP30.430,7031.702,11
JPY200,85212,47
KRW16,7620,40
Cập nhật lúc 15:14:42 24/09/2021
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