Cisco Q2 sales rise despite falling profits

4 Feb 2004

Networking giant Cisco Systems saw its net profit in the second quarter fall due to accounting charges. However, the company saw sales increase 14.5pc to US$5.4bn. Although the company’s profits declined, they were still ahead of analysts’ expectations.

For the three months ended 24 January, Cisco earned profits of US$724m, or 10 cents per share, compared with US$991m, or 14 cents per share in the same period last year.

Including a US$567m charge for an accounting change, the company earned US$1.3bn, or 18 cents per share, compared with US$1.1bn, or 15 cents per share, in the same period last year. Wall Street analysts were expecting the company to earn 17 cents per share on sales of $5.29bn.

Cisco’s sales jumped 14.5pc over the second quarter of fiscal 2003, to US$5.4bn from US$4.7bn.

Cisco was hit hard when the telecommunications bubble burst in 2001 but managed to remain mostly profitable. In fact, it has now posted seven consecutive quarters of profits above US$1bn.

The company reported strong sales of its core routing and switching products as well as its advanced technology offerings, including storage, security and Internet telephony equipment.

“Having just met with business and government leaders from around the world at the World Economic Forum, it is becoming increasingly clear that the global economy is improving,” said John Chambers, president and CEO, Cisco Systems. “As customers feel more confident to invest, we believe that we are well positioned to provide compelling value as a strategic business adviser and technology partner.

“Our strong position in the core switching and routing business continues to be complemented by positive momentum in our Advanced Technologies [division], especially this quarter in storage, security, wireless and IP telephony. The company is also gaining significant momentum in the consumer space, driven by innovative products delivered by the Linksys division,” Chambers said.

By John Kennedy