Cisco Earnings Beat Expectations

By Matt Carolan  |  Posted 2002-02-07

Early Wednesday morning, Cisco Systems Inc. released a statement stating simply that the company had beat earnings and revenue expectations for the second quarter. The statement was reportedly in response to a leaked internal memo.

On Wednesday afternoon, the San Jose, Calif., company filled in the details on its earnings.

Cisco officials said that revenue for the quarter was $4.8 billion, up from $4.4 billion in the previous quarter. In the same quarter last year, revenue was $6.7 billion.

Actual net income for the fiscal second quarter was $660 million, or 9 cents per share, up strongly from a net loss of $268 million, or 4 cents per share, in the previous quarter. In the same quarter last year, Cisco earned $874 million or 12 cents per share.

Analysts surveyed by Thomson Financial/First Call were expecting pro forma earnings of 5 cents per share, on revenue of $4.5 billion.

"This was a very solid quarter," Cisco President and CEO John Chambers said in a prepared statement. "I was especially pleased with our profitable market share gains and strong operational performance in a very challenging market, as well as our continued improvement to an already strong balance sheet."

However, in a conference call with analysts Wednesday, Chambers was hesitant to predict the companys third quarter, but eventually said the company is projecting revenues to remain flat or rise only by "low single-digit" percentages.

However, Chambers said Cisco would continue to invest in several areas—including IP telephony, security and VPN, wireless LAN and enterprise switching—as "long-term growth opportunities."

In December, Cisco offered new VPN client software, the Cisco VPN 3002 hardware client and new embedded hardware-based VPN acceleration in the Cisco PIX 525 and 535 firewall products.

"We continue to produce significant enhancements to our VPN and security solutions, adding new acceleration capabilities and end-point options for remote access as well as additional SAFE blueprints for securing wireless infrastructures," Chambers said.

SAFE is Ciscos security blueprint for AVVID, the companys architecture for voice, video and integrated data.

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