Cisco Systems on Tuesday reported significant gains in earnings and revenue for its fiscal 2005 first quarter that met analyst expectations.
Cisco earned net income of US$1.4 billion or US$0.21 per share in the quarter, which ended Oct. 30. That marked a gain of 28.5 percent from US$1.1 billion, or US$0.15 per share, a year earlier.
The networking giant reported revenue of US$6 billion, which was up 17.1 percent from US$5.1 billion a year earlier.
For the second fiscal quarter, Cisco projected revenue up 1 percent to 3 percent. After seeing the economic outlook of enterprises shift from optimism to slight pessimism several times since August 2003, President and Chief Executive Officer John Chambers said on a conference call that it was too early to predict the level of business confidence over the next four months. In the longer term, over the next several years, Chambers is optimistic.
About US$5 billion of Cisco's revenue in the quarter came from products, with US$938 million coming from services, including technical support and advisory services, Chambers said. Routers made up 21 percent of sales, switches 43 percent, services 16 percent and advanced technologies 16 percent, with other revenue making up 4 percent. Cisco's advanced technologies include home networks, IP (Internet Protocol) telephony, optical, security, storage area networks and wireless.
The quarter saw Cisco complete five acquisitions. It closed deals to buy storage software vendor Actona Technologies, VOIP (voice over IP) software maker Dynamicsoft, traffic routing software vendor Parc Technologies and traffic control software vendor P-Cub. It also closed a deal to buy certain assets of core router vendor Procket Networks for US$92 million.
There were few surprises and no major variations in growth across geographic regions, though results in China were slightly soft, bucking generally strong growth in Asian countries, Chambers said. However, Cisco had especially strong results in that country the previous quarter, he said.
Cisco expects significant competition worldwide in the next ten years from emerging Asian competitors, Chambers said, but the company has mapped out strategies for gaining advantage.
For one thing, the company's move to build more intelligence into network infrastructure will set it apart from newcomers that attempt to compete on equipment price, said Charlie Giancarlo, senior vice president and chief technology officer, in an interview following the conference call.
"We really do believe that the network has an endless opportunity to continue to absorb and incorporate functionality," such as encryption, storage virtualization and other things, Giancarlo said.