By Staff and Wire Reports
NEW YORK, N.Y. – Cisco Systems Inc.’s (NASDAQ: CSCO) fiscal third-quarter earnings rose 20 percent and met analysts’ estimates on Wednesday as the networking company’s margins and revenue continued to strengthen.
The latest quarter marks released after the closing bell is Cisco’s second straight quarter of improved earnings, which follows a yearlong streak of year-over-year profit declines.
The company is in the midst of a turnaround after restructuring last year to focus on core product areas such as routing and switching gear that shuttle data between computers. Cisco has said it is benefiting from telecommunications and other companies’ need for more robust networks to support mobile and cloud computing.
“We are successfully executing against our long-term strategic plan of growing profit faster than revenue, and in a cautious IT spending environment, we continue to outperform our competitors,” said Cisco’s Chairman and Chief Executive John Chambers in a prepared statement.
As the world’s dominant maker of networking devices that support Internet traffic, Cisco is often seen as a bellwether of companies’ technology spending plans.
For the quarter ending on April 28, Cisco posted a profit of $2.17 billion, or 40 cents a share, up from $1.81 billion, or 33 cents a share, a year earlier. Excluding stock-based compensation, restructuring-related impacts and other items, per-share earnings were up to 48 cents from 42 cents. Revenue rose 6.6 percent to $11.59 billion verses estimates of $11.57 billion.
The company’s February forecast called for earnings between 45 cents and 47 cents a share and revenue growth of 5 to 7 percent. Gross margin widened to 61.9 percent from 61.3 percent. The company’s product segment, its biggest top-line contributor, saw revenue rise 5 percent while its services segment’s revenue increased 13 percent.
Historically one of Silicon Valley’s most active buyers, Cisco has focused more recently on acquiring start-ups and small companies. Last week, Cisco agreed to acquire Truviso Inc., a real-time network data analysis and reporting software maker, and in March, said it would buy ClearAccess, a maker of customer-premise-equipment management software.
However, the company earlier this year also agreed to acquire video-software maker NDS Group Ltd. for $4 billion, the company’s biggest deal in more than two years and a reflection of Cisco’s focus on video.
Ahead of the evening trading session, U.S. stocks were off their worst levels after an announcement that Greece on Thursday will receive 4.2 billion euros from a financial aid package. But the remaining 1 billion euros of the package will be held back and disbursed “depending on the financing needs of Greece,” said the board of the euro-zone rescue fund.
The Dow Jones Industrial Average fell 77 points to 12,853. The S&P 500 dropped to 1,356 and the Nasdaq Composite declined to 2,938.
Cisco shares slipped 2.4 percent to $18.33 after hours. The stock reached a 52-week high last month, but has since pulled back 12 percent through the close.