Cisco 2Q Net Up 43%

Cisco Systems’ Inc.’s (CSCO) fiscal second-quarter earnings rose 43 percent as the networking company recorded improved revenue and margins.
Shares rose 3.3 percent to $21.10 in after hours trading as results beat the company’s expectations.

The San Jose, Calif., company is gaining market share and benefiting from telecommunications and other companies’ need for more robust networks to support mobile and cloud computing, executives said. The results suggest Cisco’s restructuring efforts last year to focus on product areas such as routing and switching gear that shuttle data between computers are taking hold.
“We are moving ahead of our competitors and our market peers,” Chief Executive John Chambers said on a conference call with analysts. “There is significant anecdotal evidence that customers are embracing our strategy.”
Chambers said the company also is benefiting from efforts to sell packages of products to upgrade multiple parts of a customer’s network infrastructure.
The company forecast fiscal third-quarter profit of 45 cents to 47 cents a share on revenue growth of 5 percent to 7 percent. Analysts had expected a per-share profit of 45 cents on 6 percent revenue growth, according to a Thomson Reuters poll.
Shares edged down 0.3 percent to $20.36 in after-hours trading.
“I think expectations were high,” ISI Group analyst Brian Marshall said. “They did a good job executing on their new game plan.”
Cisco sought to simplify its business last year, shedding expansion efforts like its Flip video cameras for consumers, following criticism it was losing ground in its traditional businesses.
With Cisco being the world’s dominant maker of networking devices that support Internet traffic, Cisco executives’ comments are closely watched for signs of companies’ technology spending plans.
In the latest period, Cisco posted 8 percent revenue growth in its two business product categories–switching and next-generation routing. Sales to service providers jumped 12 percent, contrasting with the sluggish results among that customer group from Juniper Networks Inc. (JNPR) and others.
Revenue from public-sector customers was a weak spot for Cisco, slipping 1 percent.
Cisco also raised its quarterly dividend by two cents to eight cents a share. The company started paying a dividend in March 2011, finally heeding to investor clamoring for a payout.
For the quarter ended Jan. 28, Cisco posted a profit of $2.18 billion, or 40 cents a share, up from $1.52 billion, or 27 cents a share, a year earlier. Excluding stock-based compensation expenses, acquisition costs and other items, per-share earnings rose to 47 cents from 37 cents. Revenue jumped 11 percent to $11.5 billion.
The company’s upbeat November forecast had called for an adjusted per-share profit of 42 cents to 44 cents on revenue growth of 7 percent to 8 percent.
Gross margin excluding items such as stock compensation was 62.4 percent, edging out the company’s forecast of 61.5 percent to 62 percent.