First-quarter revenue
and income up at Cisco

6 Nov 2003

Network systems giant Cisco Systems has reported an 8.5pc increase in sales revenue in its first quarter results, with revenue of US$5.1bn.

The revenues for fiscal 2004 represented a 5.3pc increase year-on-year over revenues of US$4.8bn for the same period last year. It was also a better performance than expected; Cisco had forecast its Q1 2004 revenues would rise by between 2pc and 4pc.

Cisco president and CEO John Chambers attributed the results to solid growth in core network switching products as well as the coming to fruition of strategies aimed at overcoming the downturn that were put in place three years ago.

Net income for the first quarter of fiscal 2004, on a generally accepted accounting principles (GAAP) basis, was US$1.1bn or US$0.15 per share, compared with US$618m or US$0.08 per share for the first quarter of fiscal 2003, and compared with US$982m or US$0.14 per share for the fourth quarter of fiscal 2003.

“We’ve begun our fiscal year with a solid quarter of continued operational excellence and year-over-year growth,” Chambers said.”We saw strength across our core switching and routing businesses, as well as traction in our advanced technologies. The service provider and public sector segments in particular, continue to be solid markets for our products.”

Chambers continued: “The business and technology strategies we put in place 18 to 36 months ago are showing tangible momentum. I am confident our strategies and strong execution throughout the downturn have positioned us well for future growth.”

Cash flows from operations were US$1.0bn for the first quarter of fiscal 2004, compared with US$1.1bn for the first quarter of fiscal 2003, and compared with US$1.5bn for the fourth quarter of fiscal 2003.

Cisco’s ready cash, cash equivalents and total investments were US$19.7bn at the end of the first quarter of fiscal 2004, compared with US$21.2bn at the end of the first quarter of fiscal 2003, and compared with US$20.7bn at the end of the fourth quarter of fiscal 2003.

Key achievements for the networking giant during the first quarter were the introduction of numerous IP telephony, wireless local area networking (WLAN), switching, routing and storage area networking products as well as major deployments in Asia, the US and Europe with large telecom carriers like Telstra and Hutchison, WLAN deployments with Statoil and the City of Hasselt in Belgium as well as a major software R&D deal with IBM.

“Cisco is well positioned to capture profitable growth as the markets evolve,” said Dennis Powell, chief financial officer, Cisco Systems. “This is a strong start to our fiscal year as we continue to focus on key long-term financial priorities. We reported pro forma profit margins above our goal of 20pc, improved productivity, and maintained a healthy and conservative balance sheet.”

Cisco showed much improved results of late, having grown its net income for its 2003 financial year to US$3.6bn. This was a substantial jump from US$1.9bn for the previous financial year, even though net sales stayed static for both those years at US$18.9bn.

Turnover for the most recent quarter was US$4.7bn.

By John Kennedy