Cisco Systems has reported an increase in net income on slightly lower net sales for its fourth quarter compared to last year and said it sees reasons to be "cautiously optimistic" about the future.
Cisco's net income for the three months ended July 26 came in at $US982 million, up from $US772 million in last year's fourth quarter, the networking hardware bell-wether said.
Pro forma net income for the fourth quarter was $US1.1 billion. Cisco had pro forma net income of $US1 billion in the fourth quarter of fiscal 2002.
Cisco's pro forma figures exclude items such as amortisation of intangible assets and amortisation of deferred stock-based compensation, the company said.
Net sales for the fourth quarter of Cisco's 2003 fiscal year amounted to $US4.7 billion, down from $US4.8 billion in the same period a year ago, the company said.
In the quarter, Cisco completed the acquisitions of IP (Internet Protocol) telephony software company SignalWorks and home and small business networking vendor Linksys Group for about $US16 million and about $US480 million, respectively.
Cisco said the investments and strategies of the past three years were paying off and that the company was well positioned for an economic rebound.
In fact, the company's high-end routing and switching market showed "solid sequential growth," it said in the statement.
"We are seeing some very early signs that, with the appropriate caveats, could be interpreted as cautiously optimistic," Cisco president and chief executive officer (CEO), John Chambers, said.
The fourth quarter was "a solid quarter," he said.
Cisco saw a "cautious but potentially meaningful" increase in the confidence of CEOs at customer companies and other signs that an economic recovery might be happening, Chambers said. The company haf noted an uptake in orders from medium-sized businesses and was pleasantly surprised by sales of its high-end routers and switches.
For example, orders of Cisco's GSR 12000 high-end router grew to about $US200 million during the most recent quarter, a sequential increase of more than 25 per cent, Chambers said.
Gigabit Ethernet products also did well, he said.
However, while things were starting to look better, the economy was still fragile and might not develop to the level Cisco would like to see, Chambers said.
A recovery would start in the US with small and medium-sized businesses leading the pack, according to Chambers.
Looking ahead, Cisco expected sales to nudge up in its current first quarter from the fourth quarter, the company said.