Cisco Profits as Sales Slip

CEO Chambers was happy to report a fiscal year 2002 profit despite lagging demand from service providers.

Revenues at computer networking giant Cisco Systems Inc. continued their slide in the last 12 months, but the company remains profitable.

Cisco late this afternoon reported that sales for its 2002 fiscal year, which ended July 27, were $18.9 billion – down 15 percent from fiscal year 2001. The San Jose, Calif., company recorded a profit of nearly $1.9 billion for the year, compared with a loss of about $1 billion in 2001.

In the fourth quarter of fiscal 2002, Ciscos net sales were unchanged from the previous quarter at $4.8 billion., and up 12 percent from the same period last year. Net income for fiscal Q4 was $772 million, compared with $7 million in the fourth quarter of fiscal year 2001.

In the last three months, Cisco completed the acquisitions of Hammerhead Networks Inc. and Navarro Networks Inc.

Cisco President and CEO John Chambers was upbeat during a call with analysts and the press.

"Given extremely challenging market, Q4 was a very solid quarter for Cisco," Chambers said. "This was the fourth-best pro forma net income in our history."

He was particularly pleased to report a cash flow from operations of $1.6 billion.

"We have not seen these levels [of profit margins] in years." Chambers added.

Cisco had seen big increases in sales of its Catalyst 4000, Catalyst 2950 and Catalyst 3550 switches in the last quarter. Its router sales suffered due to weak demand from network service providers, Chambers said.

As he has before, Chambers said he sees emerging opportunities for Cisco in storage networking, security, IP telephony, content networking and metropolitan Ethernet.