Cisco earnings match analyst estimates

Cisco earnings match analyst estimates

Cisco beat analysts revenue estimates but matched them on earnings per share in fiscal second quarter financial results released Tuesday

Cisco Systems has posted net income of $US1.9 billion, or $US0.31 per share, on revenue of $US8.4 billion in its fiscal second quarter financial results, exceeding revenue but matching earnings per share estimates of analysts.

A consensus of analysts who follow Cisco estimated it would earn $US0.31 per share, not including stock-based compensation, on revenue of $8US.279 billion, according to a report from Thomson Financial.

Revenue grew by more than 27 per cent from $US6.6 billion and net income on a GAAP (generally accepted accounting principles) basis grew 39.7 per cent from $US1.4 billion, compared to the year ago quarter. Earnings per share rose 40.9 per cent from $US0.22 a share, compared to the year ago quarter.

Excluding certain expenses, Cisco, a maker of computer networking equipment, earned $US2.1 billion, or $US0.33 a share in the quarter ended Jan. 27.

Growth was strong in almost all areas and product categories, chairman and CEO, John Chambers, said on a conference call following the announcement. The major exception was the enterprise business in the US, which showed order growth in the mid-single digits. This was a dip from the strong growth in preceding quarters and probably doesn't represent a long-term trend, Chambers said. In the US, sales to service providers led growth.

The company was meeting or exceeding its standing prediction of 10 per cent to 15 per cent revenue growth for the foreseeable future, Chambers said. For the company's fiscal third quarter, it predicted revenue growth of 15 per cent to 17 per cent from a year earlier, or 19 per cent to 20 per cent including revenue from Scientific-Atlanta, the video technology vendor it acquired last year.

Chambers attributed the gains to Cisco's strategy of tightly coupling its products and to the boom in video on Internet Protocol networks, which drove bandwidth needs and equipment purchases.

Cisco's advanced technologies, the new product categories the company has entered in the past few years, continued to be a bright spot. Including Scientific-Atlanta sales, the new technologies now accounted for more of Cisco's revenue than routing, Chambers said.

Advanced technologies revenue grew 23 per cent, or 66 per cent counting Scientific-Atlanta. The fastest growth among Cisco's own advanced technologies was in storage, with a gain of more than 45 per cent from a year earlier. Unified communications - IP telephony and related technologies - grew 38 per cent, and wireless and security also had strong revenue gains.

The company also has high expectations for developing markets. Product orders grew 40 per cent in the areas Cisco groups under Emerging Markets: Eastern Europe, Russia and the Commonwealth of Independent States, the Middle East and Africa, and Latin America. This growth rate might continue for the next two years, Chambers said.

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