Shares of Cisco Systems Inc
The stock has seen a dramatic rise after it hit a nearly two-and-a-half-year low on Aug 9. Shares of the company, which competes with IBM
The market also shrugged off a hike in dividend, as comments on a possible pick-up in M&A activity hit a sour note with investors unsure of Cisco's recovery and competitive position.
The specter of potential M&A adds an additional element of risk to the shares, BMO Capital Markets said in a note, adding that overall growth still seemed unimpressive.
Cisco's comments about a weak southern Europe and an uncertain public sector business in India may also be worrying.
The company, once a Wall Street darling, had been struggling with a business that had grown too big and unwieldy over the years, and issued bleak outlooks and profit warnings through several quarters.
But Chief John Chambers, who led the company for 17 years, finally scaled back on consumer businesses and laid off thousands in a sweeping overhaul, aiming to cut expenses by $1 billion.
There were some pockets of concern, notably product GM, Europe, public sector and carrier spending. While none of these concerns are new, they continue to linger, BMO Capital said.
Shares of the company fell to $20.09 in heavy morning trading on the Nasdaq. More than 50 million shares had changed hands by 1045 ET.
(Reporting by Sayantani Ghosh in Bangalore; Editing by Supriya Kurane)