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Cisco Systems profit up 25%

A boom in multimedia online content drives strong quarterly sales for the network equipment maker.

August 08, 2007|From the Associated Press

Cisco Systems Inc. said Tuesday that its fiscal fourth-quarter profit rose 25% as the network equipment maker continued to see strong sales of the routers and switches that direct traffic over the Internet and other technologies tied to a boom in multimedia online content.

Shares jumped more than 5% to $31.25 in after-hours trading on a boosted financial forecast. They closed up 19 cents at $29.69 before the earnings report.

Net income for the period ended July 28 was $1.93 billion, or 31 cents a share, compared with $1.54 billion, or 25 cents, during the same quarter a year earlier.

Excluding one-time charges, Cisco earned 36 cents a share, a penny above the estimate of analysts surveyed by Thomson Financial.

Revenue was $9.43 billion, an 18% increase from $7.98 billion last year and ahead of Wall Street's estimate of $9.29 billion.

On a conference call with analysts, Chief Executive John Chambers said Cisco was boosting its revenue forecast for fiscal 2008 to 13% to 16%.

Chambers also said Chief Financial Officer Dennis Powell would retire at the end of the fiscal second quarter. His replacement will be Frank Calderoni, a Cisco senior vice president.

San Jose-based Cisco is profiting from widespread network upgrades as Internet service providers and other companies boost capacity to handle increasingly bandwidth-heavy downloads, particularly video.

However, some analysts have expressed concerns about whether Cisco can keep up its rapid growth. Investors have been particularly worried in the last couple of quarters about a slowdown in one of Cisco's key businesses -- orders from U.S. companies -- in which growth plunged to single-digit rates. That segment rebounded in the fiscal fourth quarter, growing about 12% over a year earlier.

Cisco also is moving beyond its roots as purely a networking gear maker. During the quarter, the company completed its $3.2-billion acquisition of online meeting company WebEx Communications and the $830-million takeover of IronPort Systems Inc., a maker of anti-spam and antivirus security products.

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