Cisco Sales Boosted by Acquisition

Cisco Systems Inc. said Tuesday that fiscal third-quarter profit was little changed after costs to buy Scientific-Atlanta Inc. Sales jumped 18%, beating analysts’ estimates and sending its shares up 4.6%.

Net income was $1.4 billion, or 22 cents a share, compared with $1.41 billion, or 21 cents, a year earlier, the San Jose maker of computer networking equipment said. Revenue climbed to $7.32 billion, the biggest gain in seven quarters.

Scientific-Atlanta, bought in February for $6.9 billion, contributed $407 million in sales, more than analysts anticipated. The gain signals that Chief Executive John Chambers is succeeding in a strategy to parlay sales of Scientific-Atlanta’s set-top cable-television boxes into higher revenue.

“The big-picture trends are benefiting Cisco,” said Sunil Reddy of Fifth Third Asset Management in Cincinnati.

Excluding merger-related costs and options expense, profit was 29 cents a share, 3 cents better than Wall Street expected.

Sales in Cisco’s switching business accounted for 37% of total revenue for the quarter, rising 13% to $2.69 billion. Routers gained 5% to $1.53 billion. Its advanced technologies unit, which includes Scientific-Atlanta, surged 42% to $1.69 billion.

Scientific-Atlanta may boost Cisco’s ability to win business from cable companies such as Comcast Corp. and Time Warner Inc., the two biggest U.S. cable companies. That may spur sales growth of 20% in the fourth quarter, according to analysts surveyed by Thomson.

Cisco shares jumped 62 cents to $22.30 in extended trading after closing down 8 cents at $21.68.