Cisco Systems Inc. (CSCO) reported fiscal first-quarter earnings on Nov. 16 after market close. While earnings and revenue for the most recent quarter beat analysts’ projections, investors were displeased with weaker-than-expected guidance for the current period.

As the networking hardware company’s stock fell almost 6% in trading Thursday morning, Cisco CEO Chuck Robbins talked up long-term prospects. (See also: Cisco Reports Q3, Stock Slumps After Hours.)

Focusing on Just This Quarter

Robbins told CNBC’s “Squawk on the Street” that there’s a lot to be excited about for Cisco, notably the strong performance in the most recent quarter and future growth beyond this current quarter. Robbins attributed the guidance cut to general weakness in some larger service providers.

For the most recent quarter, Robbins highlighted that the tech firm’s global enterprise business was up 5%, subscription and SaaS business rose 48%, while the security and collaboration segments also showed very strong growth. Robbins indicates that investors should be enthusiastic about the future growth prospects of these emerging businesses and that the primary driver of the guide was weakness in service providers, which was particular to this quarter.

When asked if Cisco was losing ground to other companies, Robbins denied it, instead arguing that macro uncertainty and consolidation in the telecom industry resulted in capex freezes in big accounts.

Legacy IT Provider Demonstrates Progress in Restructuring, Set to Benefit from Repatriation

Cisco has shown significant progress in its restructuring plans to wean reliance on bulky legacy hardware systems to become a leader in high-growth markets such as the cloud, Internet of Things (IoT), and cybersecurity.

Moving forward under a Trump administration, Cisco could benefit from a repatriation bill that would lower the tax rate for U.S. corporations moving cash back from overseas. Cash hoarders such as Cisco Systems, with $71 billion in total cash and investments at the end of the first quarter could be looking at a 10% tax rate, rather than 39%. Robbins indicates that given a repatriation bill passes through Senate, the firm will would look at dividends, buybacks and strategic M&A, with a priority on returning 50% return of cash flow to shareholders. (See also: Cisco: Guidance Disappoints, Stock Falls.)


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