The stock market has been through a turbulent period lately, and Wednesday brought huge losses for investors. Growing evidence that inflationary pressures are eating away at corporate earnings could signal a continued rise in prices even as the economy slows, creating a devastating environment of stagflation. Markets were down across the board, and the Nasdaq Compound (^IXIC 0.00%) ended with losses of almost 5% on the day.
Things got worse after the market closed, because Cisco Systems (CSCO -4.43%) added to the gloomy mood with financial results that raised further concerns. However, another Nasdaq tech stock managed to produce at least a modest rebound after the market closed. We’ll reveal the name of this stock after taking a closer look at Cisco.
Cisco looks broken
Shares of Cisco Systems were already down more than 4% in Wednesday’s regular session. They then fell a further 12.5% after hours at 6 p.m. ET as investors reacted negatively to the tech company’s results for the fiscal third quarter, which ended April 30.
Cisco’s numbers failed to show investors much evidence of growth. Revenue of $12.8 billion was flat compared to last year’s sales. Strength in the Americas was offset by weakness in Greater Europe and the Asia-Pacific region. The networking giant made some minimal progress on the net income front, but adjusted earnings of $0.87 per share were up only 5% year over year.
CEO Chuck Robbins said demand for Cisco technology remains strong. Additionally, its efforts to transform the business remained on track. But the company cited new lockdowns in China in line with the national zero-COVID policy as weighing on performance, as well as the war in Ukraine and related economic disruption.
However, Cisco’s guidance for the fourth fiscal quarter was particularly weak. Revenue is expected to fall 1% to 5.5% from year-ago levels, while adjusted earnings are likely to be between $0.76 and $0.84 per share. Poor sequential performance indicates uncertainty about the near future, and investors aren’t thrilled to face such poor prospects for a company that was once the biggest in the world.
Synopsys bounces back
On the other hand, the shares of Synopsis (SNPS -3.62%) managed to perform better. Although the tech stock fell during the regular session, it rebounded after releasing its latest results, posting a 4% gain in after-hours trading.
Synopsys’ results for the fiscal second quarter, ending April 30, looked strong. Revenue of $1.279 billion was up about 25% year over year. Adjusted net income was an even larger 46% increase over prior year levels, and adjusted income of $391 million represented earnings of $2.50 per share, up from $1.70 in the second quarter of fiscal 2021.
Synopsys does most of its business in semiconductor and systems design, and that side of the business was particularly impressive, outpacing the company as a whole in both revenue and revenue. result. But that’s not to say its Software Integrity business was weak, as it enjoyed a 55% growth in segment operating profit.
Investors were pleased Synopsys saw its full-year 2022 revenue grow to between $5 billion and $5.05 billion, with adjusted earnings of $8.63 to $8.70 per share. That doesn’t make the stock look exactly cheap, but it has held up better than many Nasdaq tech stocks and looks poised to hold its own even in a tough year.