In a positive turn of events, Cisco Systems Inc. experienced a 4% surge in extended trading following the release of their strong sales and profit forecast for the current quarter. This promising outlook suggests that certain customers are once again starting to invest in their computer networks.

According to a statement released by the company on Wednesday, sales for the fiscal fourth quarter, ending in July, are expected to be in the range of $13.4 billion to $13.6 billion. This is slightly above the average analyst estimate of $13.5 billion. Additionally, Cisco forecasts a profit between 84 cents and 86 cents per share, surpassing the predicted 84 cents.

The optimistic forecast saw Cisco's shares peak at $54.11 before experiencing some partial gains. The company's shares had previously closed at $49.67, marking a 1.7% decline for the year.

CEO Chuck Robbins has been working to transform Cisco into a provider of networking services and software through strategic initiatives, such as the $28 billion acquisition of Splunk Inc. However, Cisco still faces some vulnerability to fluctuations in hardware purchases made by corporate and telecommunications customers.

In the previous quarter, Cisco reported a 4% increase in orders, an indication of future sales, when including the impact of the Splunk acquisition. However, excluding this, orders remained flat. This had caused concerns among analysts who were anticipating a decline in orders. In the preceding period, orders had declined by 12%.

For fiscal 2024, Cisco expects revenue to range between $53.6 billion and $53.8 billion, aligning with the average estimate of $53.6 billion. Additionally, the company forecasts sales growth in the low- to mid-single digits for fiscal 2025.

Cisco's Chief Financial Officer, Scott Herren, expressed optimism regarding customer demand, stating, "Customers are consuming the equipment shipped over the last few quarters in line with our expectations. We are seeing stabilization of demand as a result." CEO Chuck Robbins further added on a call that customers will have cleared their backlog by July.

The adjusted gross margin of Cisco, which is the percentage of sales remaining after production costs are deducted, is expected to be between 66.5% and 67.5% this quarter.

During Cisco's fiscal third quarter, which concluded on April 27, revenue contracted by 13% to reach $12.7 billion. However, profit was 88 cents per share, excluding certain items, exceeding analysts' estimates of $12.66 billion in revenue and earnings of 82 cents per share.

Cisco's leadership remains confident that the slowdown in orders is temporary, attributing it to customers focusing on installing previously purchased equipment. Once this backlog is cleared, Cisco anticipates a return to investment.

Furthermore, Cisco finalized its acquisition of data-crunching software maker Splunk during the quarter, resulting in an additional $413 million of revenue. As part of the acquisition, Splunk CEO Gary Steele will assume the position of a Cisco president focused on the company's "go-to-market" strategy. Concurrently, Jeff Sharritts, Cisco's chief customer and partner officer, is set to depart mid-July.

The San Jose, California-based company believes that Gary Steele's expertise in operational excellence will effectively drive Cisco's strategic plans and goals under his joint collaboration with CEO Chuck Robbins.