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Cisco's results stronger than expected

Cisco Systems Inc posted stronger-than-expected profits yesterday for its fiscal fourth-quarter as the leading US maker of networking gear largely avoided the latest woes in the telecommunications industry.

For the three months ended July 27, the company earned US$772 million, or US$0.10 per share, compared with a profit of US$7 million, or break-even on a per-share basis, in the same period a year ago.

Excluding special items, the company earned US$1 billion, or US$0.14 a share, compared with US$163 million, or US$0.02 per share, last year.

Fourth-quarter sales were US$4.8 billion, a 12 percent increase over US$4.3 billion last year.

Analysts were expecting Cisco to post a profit of US$0.12 per share on sales of US$4.9 billion, according to a survey by Thomson First Call. In April, the company cautiously said its revenue would be "flat with a slight upward bias" over third-quarter sales of US$4.8 billion.

"This was another solid quarter for Cisco, despite the ongoing challenges in the economy," said John Chambers, Cisco's chief executive. "We continued to focus on what we can control, and the results speak for themselves."

Still, the company believes fiscal first quarter revenue will only be flat to up slightly sequentially.

Chambers also addressed rumors about changes in executive leadership. Chief financial officer Larry Carter plans to retire next May, though Chambers said he will try to keep him longer.

Chambers, who did not address rumors about his own future, said Carter would be replaced by Dennis Powell, currently vice president of corporate finance.

Last year, Cisco was struggling to overcome sharply lower demand for its routers and other equipment that handle traffic over the Internet as dotcoms faltered and then larger businesses pulled back on spending.

The company shed 8,500 jobs and wrote off US$2.25 billion of inventory. Since then, the situation at Cisco seems to have improved.

In May, Cisco hinted of an upturn in tech spending. Third-quarter sales and revenues beat Wall Street expectations, though officials offered only limited and cautious guidance.

Unlike its competition, Cisco is focused more on selling to large businesses outside telecommunications companies. Sales to telecommunications carriers account for only about 20 percent of sales, shielding Cisco from the brunt of that sector's collapse.

Still, Cisco shares are down about 31 percent for the year.

On Tuesday -- before earnings were released -- shares gained US$0.71, or more than 6 percent, to US$12.07 on the NASDAQ.
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