Cisco Systems Inc (NASDAQ:CSCO) stock fell 1.81% (As on May 16, 11:22:42 AM UTC-4, Source: Google Finance) after the company forecast fourth-quarter revenue above analysts’ low expectations as the network equipment maker benefits from a pickup in enterprise spending and easing supply chain constraints. In recent quarters, Cisco has benefited from an increase in spending, with companies trying to boost their growing artificial intelligence and cloud computing needs. Cisco’s revenue has fallen for two straight quarters now, as it deals with an inventory backlog. There is potential for aggressive pricing strategies to reduce inventory levels, which could put pressure on margins through the rest of the 2024. The company reported net income of $1.89 billion, down from $3.21 billion in the same period one year ago.

Meanwhile, the company said that the company’s core internet and corporate networking business appears to have turned a corner and is now progressing toward normalization. He added that customers will likely finish installing most of the inventory backlog accumulated over the last year or so by the time the company’s fiscal year wraps up in July. That came after Cisco admitted last year that sales were still being hampered by customers struggling to digest past purchases, resulting in lower demand.

CSCO in the third quarter of FY 24 has reported the adjusted earnings per share of 88 cents, beating the analysts’ estimates for the adjusted earnings per share of 82 cents. The company had reported the adjusted revenue decline of 13 percent to $12.7 billion in the third quarter of FY 24, beating the analysts’ estimates for revenue of $12.53 billion. Splunk, which Cisco acquired to enhance its cybersecurity capabilities, contributed $413 million in revenue. Cisco finally had completed its $28 billion acquisition of the security and observability software company Splunk Inc. during the quarter.  Cisco said its product revenue came to $9.02 billion, ahead of the Street’s forecast of $8.95 billion. Services revenue topped $3.68 billion versus the $3.58 billion expected.

Cisco forecast fourth-quarter revenue to be between $13.4 billion and $13.6 billion, compared with analysts’ estimates of $13.23 billion, according to LSEG data. Cisco upped its fiscal 2024 revenue forecast to a range of $53.6 billion to $53.8 billion, from an earlier range of $51.5 billion to $52.5 billion. That lifts the company’s forecast above Wall Street’s projection of $53.14 million in annual sales.