Cisco beat earnings, but when will it start to 'augment' growth?

Cisco Systems (CSCO) topped its fiscal third-quarter earnings estimates — adjusted earnings of $0.88 per share and revenue of $12.7 billion — while also raising its full-year forecast.

Morningstar Equity Analyst William Kerwin calls demand slumps for Cisco up until now a symptom of the "COVID hangover" and may take another quarter for demand to fully stabilize.

"Buying Splunk is great and getting that inorganic growth. but Cisco's organic security and observability businesses have been underperforming peers and the broader cybersecurity market for a few years now," Kerwin says about the software company Cisco acquired. "So really, the key that we're looking at in those businesses is now that they have Splunk in the portfolio, can they augment that organic growth rather than just continuing to buy assets."

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