The stock market was rallying on Friday despite a rapidly worsening pandemic in the United States. The Dow Jones Industrial Average (DJINDICES:^DJI) was up about 1.2% at 3:25 p.m. EST, outperforming the other major indexes. Confirmed cases of COVID-19 in the U.S. topped 150,000 on Thursday, according to Johns Hopkins University.
Shares of Cisco (NASDAQ:CSCO) and Walt Disney (NYSE:DIS) contributed to the Dow's gain on Friday. Cisco reported a steep revenue decline but provided an optimistic outlook, and Disney leaned on its streaming business to beat analyst expectations.
The worst is over for Cisco
Networking hardware giant Cisco had a rough fiscal first quarter, as some of its customers continued to pull back on spending and delay purchases. Total revenue slumped 9% to $11.9 billion, and adjusted earnings per share dropped 10% to $0.76.
Both of those figures were ahead of analyst estimates, although not by much. The core infrastructure platforms segment, which includes switches and routers, saw sales slump by 16%. Applications sales were down 8%, even with strong demand for the Webex videoconferencing software. Security sales rose 6%, while services sales jumped 2%.
Shares of Cisco were up about 7.2% by late Friday afternoon, likely due to the company's outlook. Cisco expects second-quarter revenue to be down 2% to flat on a year-over-year basis, a dramatic improvement from the first quarter. Adjusted EPS is expected between $0.74 and $0.76.
Cisco CEO Chuck Robbins said during the earnings call that the initial pause in spending taken by some customers is starting to fade: "And then I think they took a pause, which is what we felt in our last quarter in orders. And then I think they reprioritized what they were going to be spending money on, and I think we started seeing some of that come back."
Including Friday's surge, shares of Cisco are still down nearly 14% so far this year.
Streaming saves Disney's quarter
Disney's parks and film businesses are still reeling from the pandemic, and a full recovery may have to wait for an effective vaccine. But there were some silver linings in the company's fiscal fourth-quarter report that provided enough good news to send the stock higher on Friday.
Total revenue was down 23% year over year to $14.7 billion, and adjusted earnings per share swung to a loss of $0.20. Analysts were expecting much worse, especially for the bottom line.
The parks segment suffered a 61% sales decline, and the studio entertainment segment saw sales tumble 52%. But media networks revenue grew by 11%, and the direct-to-consumer and international segment enjoyed 41% growth thanks to streaming.
Disney+, the company's flagship streaming service that launched just about a year ago, had over 73 million paid subscribers at the end of the fourth quarter. Disney's other streaming services also grew, with ESPN+ topping 10 million subscribers and Hulu reaching 36.6 million subscribers.
Disney's priority is now streaming, a smart move given the uncertainty around the recovery of the movie theater industry. The company has shown it's capable of drawing in subscribers, but it remains to be seen how well this shift works in the long run.
Shares of Disney were up about 2.1% by Friday afternoon. The stock is down around 4% in 2020.