Cisco’s profit up 40% on upgrades

Cisco Systems Inc.’s fiscal second-quarter profit surged nearly 40% as the world’s largest maker of networking gear benefited from equipment upgrades to support bandwidth-hogging video downloads.

The company on Tuesday also raised its revenue guidance for the current quarter, apparently quashing analyst concerns about slowing growth as its customers complete the most extensive round of network upgrades since the pre-Y2K scramble.

Cisco shares closed down 23 cents at $27.28 before the earnings announcement then gained $1.30, or 5%, after hours.

For the quarter ended Jan. 27, Cisco’s net income was $1.9 billion, or 31 cents a share, compared with $1.4 billion, or 22 cents, for the same period last year.

Excluding one-time charges, Cisco said it earned $2.1 billion for the quarter, or 33 cents a share.

The San Jose-based technology bellwether, which makes the routers and switches that direct data over computer networks, said revenue for the quarter was $8.4 billion, a 27% jump from $6.6 billion in the same period last year.

Analysts were expecting Cisco to earn, on average, 31 cents a share on $8.28 billion in revenue, according to a survey by Thomson Financial.

Cisco said $639 million of its sales came from Scientific-Atlanta Inc., the world’s second-largest cable television box seller that Cisco acquired for $6.9 billion in the third quarter of last year.

“Cisco achieved record results that were well-balanced across our geographies, products, services, customer segments and new markets,” Cisco Chief Executive John Chambers said.

Despite Cisco’s phenomenal results in recent quarters, some analysts have expressed concerns about slowing growth as the initial boost from Scientific-Atlanta’s sales wears off.

Chambers said the company expected fiscal third-quarter revenue to grow 19% to 20% over last year, when including results from Scientific-Atlanta. Without Scientific-Atlanta, Cisco’s stand-alone revenue is expected to grow 15% to 17%, Chambers said.