Cisco Systems Inc. on Feb. 14 reported organic revenue growth of about 3% for its fiscal second quarter, ending a two-year streak of declines. A one-time $11.1 billion charge related to U.S. tax law changes weighed on its bottom line, however, leaving to a net loss on a GAAP basis.
Revenue for the quarter ended Jan. 27 was $11.89 billion, up from $11.58 billion, a year earlier. The company recorded a net loss of $8.78 billion, or $1.78 cents per share, for the quarter, compared to net income of $2.35 billion, or 47 cents per share, in the year-ago period. Excluding the impact of the tax charge, the company said non-GAAP net income came to $3.15 billion, or 63 cents per share. The S&P Capital IQ consensus estimate for the quarter was 49 cents on a GAAP basis and 59 cents on a normalized basis.
The company said it plans to repatriate $67 billion of its overseas cash to the U.S. during its fiscal third quarter.
"We're very pleased with the tax rate reduction related to the Tax Cuts and Jobs Act," said CFO Kelly Kramer, speaking on an earnings call Feb. 14. "Since our fiscal year ends in July, we won't realize the full benefit this year but ... we will start to realize that full year's worth in fiscal year '19."
Cisco's board of directors also approved a $25 billion increase in share buybacks. Analysts earlier had predicted that Cisco would use its repatriated cash to drive buybacks and fuel M&A.
Most of Cisco's five product and service revenue segments saw growth during the most-recent quarter. Cisco changed the way it reported revenue from its products and services in the first quarter of fiscal 2018 to reflect the shift in its business strategy. Revenue is now broken out into five categories: infrastructure platforms, applications, security, other products and services.
For Cisco's infrastructure platforms, which includes its core network offerings related to switching, routing, wireless and data center, revenue gained 2% year over year to $6.69 billion. CEO Charles Robbins credited strong adoption of the company's new subscription-based Catalyst 9000 switching platform as a main reason for the growth
Cisco's applications segment, which includes the company's internet of things and various application software businesses, got a 6% revenue boost, to $1.18 billion. The company's security sector was also up 6% to $558 million, marked by strong performance in unified threat and web security, executives said. Services revenue gained 3% to $3.18 billion, driven by growth in software and solutions support. The company's "other products" segment slid 10% to $273 million.
Looking forward, the company said it expects to report fiscal third-quarter 2018 revenue growth of between 3% to 5% year over year.