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Cisco's quarterly profit tops analysts' estimates

August 10, 2011|Bloomberg News
  • Networking equipment maker Cisco Systems Inc., which has refocused on its high-margin routers and switches, reported a 3.3% increase in its fiscal fourth-quarter sales, to $11.2 billion.
Networking equipment maker Cisco Systems Inc., which has refocused on… (Damian Dovarganes, Associated…)

Networking equipment maker Cisco Systems Inc. reported profit that beat estimates as the company reined in expenses while refocusing on its high-margin routers and switches.

Excluding some costs, profit was 40 cents a share in the fiscal fourth quarter, Cisco said Wednesday. Analysts had predicted 38 cents on average, according to Bloomberg data. Sales rose 3.3% to $11.2 billion.

Chief Executive John Chambers is slimming down the company amid slowing customer spending and increased competition from Juniper Networks Inc. and Hewlett-Packard Co.

Cisco has fired workers and closed its Flip video camera unit to concentrate on its main networking products. The cost-cutting is beginning to pay off, even as sales grow relatively slowly, said Colin Gillis, an analyst at BGC Partners in New York.

"You've got good cost controls on the earnings," he said. "It's a company that's going to be driving earnings twice as fast as revenue."

Sales will grow 1% to 4% in the current quarter, Chambers said on a conference call. That equates to as much as $11.2 billion. Analysts had predicted $10.9 billion.

Cisco shares rose $1.71, or 12%, to $15.44 in extended trading after the report. The shares, down 32% this year, had closed at $13.73 in regular trading.

Net income fell to $1.23 billion, or 22 cents a share, from $1.94 billion, or 33 cents, a year earlier, the San Jose-based company said. Cisco's previously announced reorganization expenses weighed on profit in the period.

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