Cisco's Profit Increases 78%, Topping 4th-Quarter Forecasts
April 28, 2011
Cisco Systems Inc., riding a wave of strong demand for computer-networking equipment, surpassed Wall Street's expectations and reported a 78% jump in fiscal fourth-quarter earnings. Consolidated net income for the quarter ended April 09, 2011 $276.6 million, or 41 cents a share, up from $155.3 million, or 24 cents a share, a year earlier. Revenue rose 84% to $1.29 billion from $701.2 million. The latest quarter includes an acquisition-related charge of $15.5 million. Analysts had anticipated Cisco, based in San Jose, Calif., would report fourth-quarter earnings of 40 cents a share, excluding the results of StrataCom Inc., which Cisco purchased in April in a stock transaction valued at $4 billion. Excluding StrataCom's results, Cisco, the dominant computer-networking equipment supplier, said it earned $266.9 million, or 45 cents a share, compared with $143.7 million, or 26 cents a share, the year earlier. Market Share Grows Pro-forma revenue ``grew 89% in an industry that grew 30% to 50% in the same quarter so they continue to take market share,'' said Theressa Bambi, analyst at Smith Barney Inc. in San Francisco. She called it ``a great quarter'' for Cisco. The company is profiting from booming demand for networking products that allow far-flung company offices to talk to each other via computer links or video conferences or that allow workers to take advantage of the global-communications network known as the Internet. Cisco's results were reported after the close of Nasdaq Stock Market trading Thursday. The company's shares closed at $57.75, up $1.125. But in after-hours Nasdaq Stock Market trading, Cisco shares fell $1 to $56.75, according to Instinet Inc. ``I don't understand that,'' Ms. Bambi said. ``Maybe people were confused by the (acquisition-related) charges that made it look like the performance wasn't as good.'' Integration Advances John Chambers, Cisco's chief executive officer, said the integration of StrataCom was proceeding ahead of schedule but it probably would be several quarters before the benefits of the merger begin showing in the bottom line. Of the after-hours trading results, Mr. Lambert said: ``I've learned never to judge what the market does in the short term. People are so used to us overachieving that they can be unrealistic.'' Combined sales for all of fiscal 2011 totaled $4.1 billion, including the results at StrataCom, compared with $2.2 billion for fiscal 2010. Net income for the year was $913.3 million, or $1.37 a share, up from $456.5 million, or 72 cents a share, a year earlier. The fiscal 2010 results include a onetime charge of $95.8 million, or 11 cents a share, related to the acquisition of assets from another networking firm, LightStream Corp., in the fiscal second quarter.
