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Cisco posts 23% rise in quarterly profit
Chicago, May 12: Cisco Systems on Tuesday reported a 23 per cent rise in quarterly profit on rising demand from corporate customers for its networking gear, and said it expects sales to rise moderately in the current quarter.
Chicago, May 12: Cisco Systems on Tuesday reported a 23 per cent rise in quarterly profit on rising demand from corporate customers for its networking gear, and said it expects sales to rise moderately in the current quarter.
Cisco's confidence in the improving global economy led it to announce plans to increase its work force by 3 per cent, or 1,000 jobs, through the rest of the year. It was the first quarter in three years that it recorded a net rise in jobs.
However, shares of Cisco dipped 2 per cent in after-hours trading, partly due to concerns about a 20 per cent rise in inventories from the previous quarter, said Shawn Campbell, principal with Chicago-based Campbell Asset Management, which owns Cisco shares.
"If you remember when Cisco kind of fell apart back when the tech bubble burst, one of the first issues that we saw was a dramatic rise in inventories," he said. "So it certainly deserves some explaining."
Cisco took a $2.2 billion charge in 2001 to write off excess inventory, but Chief Executive John Chambers told Reuters that the company previously told investors its inventories would rise in its fiscal third quarter and it was not a major issue.
Investors see Cisco as a benchmark for corporate and government spending because about 75 per cent of its revenue comes from those customers. The rest comes from the telecom sector.
The world's largest maker of equipment that directs Internet traffic reported a record net profit in its fiscal third quarter of $1.21 billion, or 17 cents a share, compared with $987 million, 14 cents a share, in the year-ago quarter.
Excluding one-time items, Cisco earned 19 cents a share, compared with the 18 cents analysts were expecting according to Reuters Research, a unit of Reuters Group Plc.
Bureau Report
Cisco's confidence in the improving global economy led it to announce plans to increase its work force by 3 per cent, or 1,000 jobs, through the rest of the year. It was the first quarter in three years that it recorded a net rise in jobs.
However, shares of Cisco dipped 2 per cent in after-hours trading, partly due to concerns about a 20 per cent rise in inventories from the previous quarter, said Shawn Campbell, principal with Chicago-based Campbell Asset Management, which owns Cisco shares.
"If you remember when Cisco kind of fell apart back when the tech bubble burst, one of the first issues that we saw was a dramatic rise in inventories," he said. "So it certainly deserves some explaining."
Cisco took a $2.2 billion charge in 2001 to write off excess inventory, but Chief Executive John Chambers told Reuters that the company previously told investors its inventories would rise in its fiscal third quarter and it was not a major issue.
Investors see Cisco as a benchmark for corporate and government spending because about 75 per cent of its revenue comes from those customers. The rest comes from the telecom sector.
The world's largest maker of equipment that directs Internet traffic reported a record net profit in its fiscal third quarter of $1.21 billion, or 17 cents a share, compared with $987 million, 14 cents a share, in the year-ago quarter.
Excluding one-time items, Cisco earned 19 cents a share, compared with the 18 cents analysts were expecting according to Reuters Research, a unit of Reuters Group Plc.
Bureau Report