Surging profits for Cisco in first quarter

09-11-2006

by Emmet Ryan

Shares in Cisco surged after the world's largest networking firm reported strong growth in profits for its fiscal first quarter.

The company's share price rose by 9 percent in after-hours trading on the Nasdaq after Cisco reported a 28 percent growth in profits for the period ending 28 October. The networking giant, which employs approximately 50 people in Ireland, recorded profits of USD1.6 billion, with earnings per share of USD0.26 compared with profits of USD1.3 billion and earnings per share of USD0.20 for the same period last year.

Sales in the quarter also rose significantly to USD8.2 billion compared with USD6.6 billion a year ago. Cisco's figures were boosted by the performance of recently acquired Scientific-Atlanta, which had sales of USD584 million for the quarter.

Growth was particularly strong in emerging markets such as Eastern Europe, Latin America, Africa and the Middle East, where orders were up over 40 percent. Sales to internet service providers worldwide rose 23 percent compared to the same period last year.

The company expects the momentum to carry into the second quarter where year-on-year revenue growth of between 24 percent and 25 percent is expected, which would equate to sales of about USD8.2 billion or USD8.3 billion.

"Cisco delivered another strong quarter, with record results from a revenue, net income and earnings per share perspective. This strong momentum demonstrates that customers increasingly share our vision of the network as the platform for all forms of communication and IT," said John Chambers, Cisco president and chief executive, in a statement.

"We are in the midst of a market inflection that is changing the landscape of networking, and we believe the network is becoming the platform for the next generation of IT, revolutionising the way people connect, communicate and collaborate. We laid the cornerstones for our strategy to capture this shift several years ago and believe we are now uniquely positioned for continued growth and increased share of our customers' total IT spend," said Chambers.