Shares of Cisco Systems (NASDAQ:CSCO) fell 15.5% in August 2019, according to data from S&P Global Market Intelligence. Mainly, the stock took a 12.3% haircut in a span of two days around the networking equipment giant's earnings report.
Cisco's fourth-quarter sales rose 4.5% year over year, landing at $13.4 billion. Adjusted earnings increased 19% to $0.83 per diluted share. Both of these line items edged out the Wall Street consensus, which had been calling for earnings near $0.82 per share on revenues in the neighborhood of $13.39 billion.
At the same time, Cisco's management offered somewhat disappointing guidance for the next reporting period. At the midpoint of the provided guidance ranges, first-quarter revenues should stop near $13.23 billion, while adjusted earnings are headed toward roughly $0.81 per share. For this period, analysts had been expecting earnings of approximately $0.83 per share on sales around $13.4 billion.
The computer networking veteran is struggling to make up for slow orders from Chinese telecoms. Order volumes in that subsector came in 21% below their year-ago reading in the fourth quarter. Other sectors provided solid growth, led by a 21% boost to global sales of security products and services.
The end of the Chinese-American trade war can't come soon enough for Cisco's investors. That being said, the resulting discount to the share prices makes Cisco a solid buy for long-term investors with enough patience to outlast the international trade tensions.