Cisco Reports Upbeat Earnings

Despite a continued tough spending environment for technology, Cisco Systems Inc. on Tuesday announced solid earnings and revenue growth for its recent fiscal quarter.

Cisco met Wall Street expectations in earning $1.4 billion for its first fiscal quarter of 2005 on $6 billion in revenue. The company’s net income represented a 28.5 percent jump over the year-ago quarter. Revenue was up 17 percent.

The quarter represented the sixth consecutive sequential revenue growth for Cisco, and product revenue growth was up 18 percent year over year for the networking company.

In its advanced network technology business, which includes home networking, IP telephony, optical networking, security, storage area networks and wireless, Cisco saw growth that ranged from 5 to 30 percent, according to John Chambers, CEO of the San Jose, Calif. company.

“From an advanced technology perspective, momentum continued to be solid,” Chambers said. “We not only are creating a number of new billion dollar revenue streams, but the value proposition to our customers continue to expand. While there is always room for improvement, we are pleased with our execution. We appear to have gained market share in most advanced network technologies.”

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During the quarter, Cisco closed on five acquisitions, including Actona Technologies Inc. for $90 million, Dynamicsoft Inc. for $69 million, Parc Technologies Ltd. for $14 million, P-Cube Inc. for $213 million and Procket Networks Inc. for $92 million.

On the downside, Chambers said Cisco is seeing increased competition from Asian competitors. In addition, the company is in a transition period with both high-end customers for its new CRS 1 router and at the lower end with its Integrated Service Router line, he said.

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For the second quarter of fiscal 2005, Cisco expects to see a revenue increase of between 1 to 3 percent over the first quarter. and a 12 to 14 percent increase year-over-year.

Cisco had identified four or five new advanced technology areas beyond the six it is working to develop, Chambers said. Although Cisco is beginning to invest in the next generation of new opportunities, he would not signal what those products are.

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