Cisco posted net income of $1.9 billion, or 31 cents per share, on revenue of $8.4 billion in its fiscal second quarter financial results reported Tuesday, exceeding revenue but matching earnings per share estimates of analysts.
A consensus of analysts who follow Cisco estimated it would earn 31cents per share, not including stock-based compensation, on revenue of $8.279 billion, according to a report from Thomson Financial.
Revenue grew by more than 27% from $6.6 billion and net income on a GAAP (generally accepted accounting principles) basis grew 39.7% from $1.4 billion, compared to the year ago quarter. Earnings per share rose 40.9% from 22 cents a share, compared to the year ago quarter.
Excluding certain expenses, Cisco earned $2.1 billion, or $0.33 a share in the quarter ended Jan. 27.
Growth was strong in almost all areas and product categories, Chairman and CEO John Chambers said on a conference call following the announcement. The major exception was the enterprise business in the United States, which showed order growth in the mid-single digits. This was a dip from the strong growth in preceding quarters and probably doesn’t represent a long-term trend, Chambers said. In the United States, sales to service providers led growth.
The company is meeting or exceeding its standing prediction of 10% to 15% revenue growth for the foreseeable future, Chambers said. For the company’s fiscal third quarter, it predicted revenue growth of 15% to 17% from a year earlier, or 19% to 20% including revenue from Scientific-Atlanta, the video technology vendor it acquired last year.
Chambers attributed the gains to Cisco’s strategy of tightly coupling its products and to the boom in video on IP networks, which drives bandwidth needs and equipment purchases.
Cisco’s advanced technologies, the new product categories the company has entered in the past few years, continued to be a bright spot. Including Scientific-Atlanta sales, the new technologies now account for more of Cisco’s revenue than routing, Chambers said.
Advanced technologies revenue grew 23%, or 66% counting Scientific-Atlanta. The fastest growth among Cisco’s own advanced technologies was in storage, with a gain of more than 45% from a year earlier. Unified communications — IP telephony and related technologies — grew 38%, and wireless and security also had strong revenue gains.
The company also has high expectations for developing markets. Product orders grew 40% in the areas Cisco groups under Emerging Markets: Eastern Europe, Russia and the Commonwealth of Independent States, the Middle East and Africa, and Latin America. This growth rate might continue for the next two years, Chambers said.
