Cisco Systems briefly enjoyed the benefits of exceeding Wall Street expectations for the third quarter on Wednesday as shares gained nearly 4 percent in extended trading.
But then chief executive John Chambers warned in an earnings conference call late Wednesday afternoon that Cisco's current (fiscal fourth) quarter was proving to be a challenge, and that changed everything.
Shares of Cisco (NASDAQ: CSCO) closed Wednesday at 17.78, then jumped to 18.59 after the Q3 numbers were released. Following the earnings call, shares fell as low as 17.12, or 3.9 percent.
The company said profit for the fiscal third quarter ended April 30 was $1.8 billion, or 33 cents a share, down 18 percent from $2.2 billion, or 37 cents a share, in last year's third quarter.
Cisco's Q3 revenue was $10.9 billion, up 4.8 percent from $10.4 billion last year, while adjusted income was 42 cents a share.
Wall Street estimates called for Cisco to report Q3 net income of 37 cents a share on revenue of $10.87 billion.
In a statement accompanying the earnings release, Chambers said, "This quarter played out as we expected. We have acknowledged our challenges. We know what we have to do."
Cisco recently announced a major restructuring designed to streamline decision making and focus on the networking equipment vendor's core businesses.
In Wednesday's conference call, Chambers said more layoffs were coming and backed off a prediction that Cisco will continue annual sales growth of 12 percent to 17 percent.
Last month Chambers announced that Cisco would discontinue making the Flip video camera, resulting in the loss of more than 500 jobs.