Software and hardware device supplier Cisco Systems Inc. (CSCO) dropped 0.36 percent on Thursday to settle at $41.17, highlighting the stock consolidating at a level equals to the level prior to announcement of quarterly results this week. The controversial results for the first quarter of fiscal year 2021 brought the share price up 2.75 percent to $42.54 on Monday.

The revenue of Cisco Systems in the last quarter was $11.9 billion, which is roughly 9 percent lower year-on-year, due to the negative effects of COVID-19. The company was, however, able to beat Wall Street earnings projections of $0.7 per share by posting earnings of $0.76 per share. GAAP earnings were marginally lower at $0.51 per share, down 25% year-on-year. The gross margin declined to 63.6%. Thanks to the management of the company, which called the past quarter “a solid start to the 2021 fiscal year” and noted “signs of business improvement”, as investors responded favorably to the report. In other words, Cisco Systems believes that the second quarter will be stronger.

In the second quarter, Cisco Systems’ revenue is expected to be 0-2 percent lower year-on-year. That’s higher than the $11.6 billion expected by Wall Street. In the second quarter, gross margin is projected to begin to fall to around 64.5 percent. Despite this, against the per share earnings of $0.73 as expecting the analysts, Cisco forecast earnings of $0.74 to $0.76 per share.

Cisco Systems continues to expand its presence in the areas of not only networking equipment and solutions but is also eyeing expanding in cloud and hybrid technology. In the field of connected technology, the company collaborates with 23 major car manufacturers. For having promising solutions in 5G technology, Cisco Systems is also a beneficiary of the growing 5G market.

But selling subscription software services is one of the key drivers of the improved revenues of Cisco Systems Inc. (CSCO). According to the company itself software subscription revenue is more reliable than the sales of hardware on which the company was previously based.

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