Despite a dismal quarter among competitors and a faltering service provider
segment, Cisco Systems Inc. beat analyst estimates, posting a 12 percent boost
in sales for its network transmission and Internet Protocol-based products.
But the company is also warning that the service provider markets are still
struggling, and may continue to generate dwindling business for some time.
Unlike other network gear providers, Cisco saw its sales rise for its fourth
quarter ending July 27.
Total sales totaled $4.8 billion, buoyed by growth in commercial and
enterprise customer business.
Special items excepted, the company posted earnings of $1 billion at 14 cents
a share, above analysts' earlier estimates of 12 cents a share. That compares to
earnings of $163 million posted during the same period last year.
The San Jose-based company also announced it is beefing up its stock buyback
program, raising the goal from $3 billion to $8 billion. One incentive to do so,
ironically, is the company's stock price, which at $12.07 is close to a yearly
But Cisco is not without trouble spots, and one of them appears to be service
provider customers such as cable operators, telcos and Internet carriers.
In a conference call, Cisco CEO John Chambers noted it would not be
surprising if that trend extends two more quarters.
With service providers trimming gear purchases until revenues improve, 'there
is a good chance there may be a continuing wane in capex,' Chambers added.
Nevertheless, Cisco has put effort into strengthening relations with these
carriers and investing in its service provider product resources to gain a jump
on competitors when this sector does turn around, Chambers said.
'Only time will tell if this strategy plays out the way we hoped,' Chambers