Cisco misses profit forecasts amid struggling switches and routers business

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Cisco misses profit forecasts amid struggling switches and routers business

Cisco forecast adjusted profit for the current quarter below analysts' estimate as the company's traditional business of switches and routers continues to struggle with sluggish demand.

Shares of the world's largest networking gear maker fell more than four percent in extended trading.

Cisco has been beefing up its wireless and security businesses to offset weakness in its traditional switching unit, which is also facing intense competition from companies such as Juniper Networks and Huawei.

However, the newer businesses are not growing fast enough to make up for declines in its main networking division.

Revenue from Cisco's switching business fell seven percent to US$3.72 billion in the first quarter ended 29 October.

The decline in switching is likely to stretch out over several quarters, Needham Co analyst Alex Henderson said.

Revenue from security business rose 11 percent to US$540 million, while wireless unit's revenue fell two percent to US $632 million.

Cisco said it expected an adjusted profit of 55-57 cents per share for the second quarter, lower than analysts' average estimate of 59 cents, according to Thomson Reuters I/B/E/S.

"President-elect Trump appears to be very business oriented and is very focused on driving the US economy," chief executive Chuck Robins said on a conference call.

Donald Trump's surprise victory in the US presidential election moves US companies much closer than they have been in years to winning a big tax break on US $2.6 trillion in foreign profits.

Cisco had US $71 billion in total cash and investments at the end of the first quarter, including US $10.4 billion in the United States.

The company, which in August said it would lay off about 5,500 employees from the first quarter, recorded a pre-tax restructuring charge of US $411 million.

Excluding items, the company earned 61 cents per share.

Analysts on average were expecting adjusted earnings of 59 cents per share on revenue of US $12.33 billion.

(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Sriraj Kalluvila and Anil D'Silva)

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