Cisco posts 34 rise in profits, shares fall
09-05-2007
by Ciara O'Brien

Networking firm Cisco reported a strong performance for its fiscal third quarter, but its results failed to impress investors.

Demand for online video helped drive demand for the company's network equipment as service providers such as telecoms and cable television companies invested in advanced network gear.

Sales for the quarter reached USD8.9 billion, a 21 percent rise on the same period a year ago, with net income totaling USD1.9 billion, up 34 percent on the year-ago quarter. Despite the boost in profits and revenue shares in Cisco dropped by more than 5 percent in after-hours trading Tuesday.

Earnings per share were USD0.30, with non-GAAP earnings per share of USD0.34, narrowly beating the USD0.33 per share that analysts had predicted.

Cisco's results were helped along by the performance of the recently-acquired Scientific-Atlanta, which had sales of USD752 million for the quarter. This compares with USD407 million during the third quarter of fiscal 2006.

Meanwhile, Cisco's net sales for the first nine months of fiscal 2007 hit USD25.5 billion, up from USD20.5 billion for the first nine months of fiscal 2006. Net income for the period came in at USD5.4 billion, USD0.86 per share.

Dennis Powell, chief financial officer with Cisco, said the firm was pleased with its performance. "The consistency of Cisco's performance can be attributed to our balanced approach across geographies, products, services, customer segments and new markets," he said.

Cisco has also been on a bit of a shopping spree recently, announcing an agreement to acquire on-demand collaborations experts WebEx Communications, and completing the purchase of Five Across, Reactivity, NeoPath Networks, SpansLogic, and Utah Street Networks.

"We are pleased with Cisco's continued year-over-year growth based on strong execution across the company," said Cisco chief John Chambers. "In our view, we are in the midst of a unique market transition, where all of the action is going to the network and our vision for the network as a platform for all forms of communications and IT has become a reality."

In a conference call, Chambers forecast revenue growth for the fiscal fourth quarter of between 15 percent and 16 percent, putting revenue around the USD9.3 billion mark, which is above analysts' expectations of USD9.23 billion.

Cisco has a workforce numbering 51,000 globally, including 66 people in Dublin where the Californian company has an Irish sales operation, and a finance (captive leasing) and treasury office. In November last year, the company announced it planned invest USD40 million in a Research and Design centre in Ireland, which would create 50 graduate jobs initially and increase to 200 positions over the next three years.