Cisco’s Quarterly Profit Rose 30% on Steep Sales
Cisco Systems Inc. on Tuesday said fiscal second-quarter profit rose 30% as the world’s top computer-networking company pushed aggressively into new markets and expanded its reach in existing ones.
Net income rose to $457.3 million, or 43 cents a diluted share. That’s up from profit before charges of $351.9 million, or 34 cents, in the year-earlier period, adjusted for a 3-for-2 stock split on Dec. 16. Cisco was expected to earn 42 cents, the average estimate of analysts surveyed by IBES International Inc. Revenue for the quarter ended Jan. 24 rose 27%, to $2.02 billion, from $1.59 billion.
Strong sales in American markets and improved European sales helped power the company to its 32nd-consecutive quarter of revenue and earnings growth, the San Jose-based company said.
A large part of Cisco’s revenue growth came from “switching” products bought by corporations to link employees to computer networks. Cisco also sold more equipment to phone companies, which are experiencing a surge of Internet-related traffic.
“Cisco is benefiting from increasing demand for telecommunication lines and services,” said Martin Pyykkonen, an analyst at CIBC Oppenheimer who has a “buy” rating on the company.
Cisco’s shares, which closed at a record $63.94 in Nasdaq trading on Monday, fell 94 cents to $63 Tuesday before earnings were released. The shares were little changed in after-hours trading.
In the year-ago second quarter, Cisco had a charge of $43.2 million to write off research and development and a gain of $47.3 million on the sale of stock in other firms. After the gain and the charge, the company reported bottom-line net income of $338.5 million, or 33 cents a diluted share. There were no gains or charges in the most recent quarter.
U.S. companies now report earnings per share two ways: diluted, which reflects options, warrants and other securities convertible into common stock, and basic, which doesn’t reflect them. Cisco’s second-quarter basic earnings rose to 45 cents a share from 36 cents a year ago.
* MORE EARNINGS: D15
