Cisco Systems pleased the markets yesterday with fourth quarter and annual results that suggest that the network equipment maker has at last turned the corner and is set to return to at least moderate growth.
The former star performer that is seen as a bellwether of the US tech sector, reported net earnings of US$982m on sales of US$4.7bn in the fourth quarter ending 26 July 2003. Although sales fell by 2.6pc compared with the fourth quarter 2002, profits rose by 27.2pc on last year’s US$772m.
“We are pleased to report another solid quarter in a challenging market,” commented John Chambers, president and CEO, Cisco Systems. “We continue to achieve some of the best financial measurements in our company’s history, with solid momentum spanning net income, gross margins, profitable market share gains, focus on profit contribution, geographic balance and advanced technology results.”
The full year results were also encouraging. Although net sales were unchanged at US$18.9bn for fiscal 2003 net income for fiscal 2003 was US$3.6bn, compared with US$1.9bn the previous year.
In addition, the company’s cash position remained healthy – cash and investments were US$20.7bn at the end of fiscal 2003, compared with US$21.5bn at the end of fiscal year 2002, and compared with US$20.3bn at the end of the third quarter of fiscal 2003.
Chambers said that the company’s focus on investing in high-end technology in terms of R&D and acquisitions over the last three years was beginning to pay off. “This is particularly true in high-end routing and switching, where we saw solid sequential growth.”
He indicated that he saw signs of impending recovery in the market. “For the first time in a long time we are seeing a number of potential positive signs of economic recovery, business improvements and CEO confidence and therefore potential capital expenditure spending in our area.”
By Brian Skelly
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