Cisco Systems reported lower quarterly net profit after an accounting charge, but sales rose more than expected as corporate customers bought more networking equipment.

For the third quarter ended on Jan. 24, Cisco posted net income of $724 million, or 10 cents a share, on revenue of $5.4 billion. During the same quarter last year, Cisco earned $991 million, or 14 cents a share, on revenue of $4.7 billion.

Excluding a $567 million charge for an accounting change related the previously-announced acquisition of Andiamo Systems, Cisco earned $1.3 billion, or 18 cents a share, a penny better than analysts expected. Sales also exceed the average target of $5.29 billion established by Wall Street analysts.

Investors see Cisco as a benchmark for corporate and government spending because about 75 percent of its revenue comes from those customers.

“The key for the company is their enterprise business and particularly the U.S. enterprise business,” Sean Campbell, principal with Campbell Asset Management, told Reuters. “This is one of the first glimpses we get,” of IT spending.

John Chambers, the chief executive officer of San Jose-based Cisco, which has a major operation in RTP, also noted that customers’ capital budgets were on the rise again, reflecting larger trends.

“It is becoming increasingly clear that the global economy is improving,” said Chambers. “As customers feel more confident to invest, we believe that we are well positioned to provide compelling value as a strategic business adviser and technology partner.”

Chambers also showed optimism for Cisco’s emerging growth businesses, which includes storage, security and Voice over IP technology. The company said its advanced technology businesses accounted for 15 percent of total sales in the quarter as it expands beyond its core business of selling switches and routers.

“Our strong position in the core switching and routing business continues to be complemented by positive momentum in our advanced technologies, especially this quarter in storage, security, wireless and IP telephony,” Chambers said. “The company is also gaining significant momentum in the consumer space, driven by innovative products delivered by the Linksys division.”

Last year, Cisco bought Linsys for $480 million, allowing it to enter the lucrative home networking business. During the quarter, Cisco also announced it was buying Latitude Communications, a maker of business conferencing products, for $80 million in cash.

Cisco’s guidance for fiscal third-quarter sales was for 1-3 percent growth from the fiscal second quarter, which would be about $5.45 billion to $5.56 billion. The current consensus sales estimate for the quarter is $5.4 billion.

Shares of Cisco fell almost 5 percent to $25.10 in trading after-hours, when the company released earnings. The stock closed for the day at $26.41, up 21 cents.

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