Cisco Systems Inc.’s stock is on the rise today after the company came up with first-quarter earnings and revenue that exceeded Wall Street’s expectations and made a strong forecast for the next three-month period.

The networking giant reported a profit before certain costs such as stock compensation of 76 cents per share on revenue of $11.9 billion. Wall Street analysts had expected the company to report earnings of 70 cents per share on revenue of $11.85 billion.

Cisco is one of numerous companies that has seen its business take a beating from the coronavirus pandemic. The company’s revenue fell 9% on an annualized basis, it said in a statement, its fourth successive quarter of revenue declines.

Cisco’s problem is that a great deal of its revenue comes from sales of equipment to corporate data centers and offices, and those customers have notably tightened their pursestrings now that more of their employees are working from home.

The company reported product revenue of $8.58 billion, down 13% from the same period a year ago. Product revenue from infrastructure platforms, which includes Cisco’s networking and routers, fell 16%, to $6.34 billion. The company told investors that this segment of its business had been hit hardest by the coronavirus.

Applications sales fell 8%, to $1.38 billion, but there was one bright spot, with sales of security products rising 6%, to $861 million.

Cisco Chief Executive Chuck Robbins (pictured) told analysts the company also benefited from a 5% rise in public-sector orders, thanks to stimulus spending that increased government orders in both the U.S. and abroad. However, Robbins said orders from its enterprise, commercial and service provider customers all declined.

“What I kind of was hopeful was going to happen, which I think we did see, is that we had customers who were super-focused on getting their employees working from home properly and getting their security set up,” Robbins said on a call with analysts. “I think everyone raced to do that, 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.”

Those returning customers might just be enough to prop up Cisco in the next few months, too. For its second quarter, Cisco sees revenue of between 74 and 76 cents per share, with revenue declining 2% year-over-year. Wall Street had forecast a profit of 73 cents on $11.63 billion in revenue, implying a 3% decline.

The forecast was strong enough to convince investors that Cisco might just be capable of reversing its fortunes in the not too distant future. The company’s stock rose more than 7% in after-hours trading.

Analyst Holger Mueller of Constellation Research Inc. said Cisco was going through some challenging times, and adding a pandemic into the mix wasn’t really helping. He said the lower revenue shows that Cisco is still struggling to tap into cloud growth, even though the cloud needs networking as a foundation.

“As enterprises move workloads into the cloud, Cisco loses on-premises network revenue,” Mueller said. “Cisco’s services revenue offers a glimpse of hope, but it did not grow fast enough to overcome the lost product revenue.”

Moor Insights & Strategy analyst Patrick Moorhead agreed with that assessment, noting that it’s tough going for infrastructure providers right now.

“Cisco can thankfully rely on its security and SaaS businesses to lift it,” he said. “Demand was strong in security, Meraki and Webex, which was balanced by declines in networking infrastructure.”

Moorhead said he was encouraged by strong sales of Cisco’s latest Catalyst 9000 switches and WiFi6 products. “I was very pleased to see this and also that increased its software sold as a service by 4%,” he said. “The company’s strategy to diver deeper into software and services is paying off.”

Charles King of Pund-IT Inc. said Cisco’s after-hours stock bump demonstrates the value of being able to exceed Wall Street’s dour expectations. He said the company was somewhat fortunate to see a boost in sales to the public sector and in its security business.

“That enabled Cisco to beat estimates for this quarter and to offer modestly better guidance than analysts are estimating for the quarter ahead,” King said. “It definitely doesn’t qualify as a stellar quarter, but winning doesn’t always require a championship performance either.”

In a separate announcement, Cisco said Chief Financial Officer Kelly Kramer will retire in December, to be replaced by former Autodesk Inc. CFO Scott Herren.

Photo: Cisco Pics/Flickr