Cisco posts strong financials, beating Wall Street estimates
Cisco (Nasdaq: CSCO), the networking and IT giant, posted a healthy 14.5 percent increase in net income for the first quarter of 2013.
The firm reported net sales of $12.2 billion, a 5.4 percent year-over-year increase, GAAP net income of $2.5 billion, or 46 cents per share, and non-GAAP net income of $2.7 billion, or 51 cents per share, the company announced after the close of market trading on Wednesday.
The figures topped Wall Street analysts' estimates of $12.18 billion in net sales and non-GAAP earnings per share of 49 cents, according to a report by the Associated Press. In response to the strong results, Cisco's share price rose in after-hours trading.
Cisco CEO John Chambers said Cisco is "starting to see some good signs in the U.S. and other parts of the world which are encouraging." He predicted that Cisco's sales would increase in the range of 4 percent to 7 percent year-over-year in the next quarter. This would be in line with analysts' expectations of $12.47 billion, according to a Reuters report.
"All things considered the guidance was actually decent. The commentary was encouraging considering the mixed environment we're in," RBC Capital analyst Mark Sue was quoted by Reuters as saying.
Cisco's strong performance was all the more surprising considering that many other networking gear firms posted weak financials this quarter, raising concerns about broad weakness in enterprise demand for networking gear, according to a report by the Wall Street Journal.
Cisco's effort to diversify from its core network switching and routing market appears to be paying off. While switching revenues declined 2 percent and routing revenues were flat, data center revenues jumped 77 percent and wireless increased 27 percent in the first quarter of 2013 compared with the same quarter last year.
A key part of the diversification strategy is acquiring companies. In the most recent quarter, Cisco acquired Intucell, a provider of self-optimizing network software for mobile carriers, and Cognitive Security, a Czechoslovakia-based security threat analysis firm. In addition, it agreed to buy SolveDirect, a Viennese cloud services management firm, and Ubiquisys, a provider of 3G and 4G LTE small-cell technologies.
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