Share prices soar as Cisco shows some gains in quarter

Networking giant Cisco (Nasdaq: CSCO) beat analyst estimates of its fourth fiscal quarter profits, despite seeing net income plunge from a year ago, but the combination was enough to send traders out looking for shares, driving prices up above $16 in mid-morning. The stock had closed at $13.73 on Nasdaq. (See this related story: Is it too early to call Cisco a turnaround?)

Cisco said it earned 40 cents a share in the fourth quarter, better than the 38 cents analysts had expected, despite the 36 percent dip in net income. Sales came in at $11.2 billion, beating analyst expectations of $11 billion.

In May, after it became obvious that Cisco was losing shares to competitors like Juniper Networks and HP and that some customer segments were spending less on technology, Cisco CEO John Chambers vowed to rein in spending by as much as $1 billion, to get the company more in line with expected revenue.

That cost cutting has been well received by analysts.

"You've got good cost controls on the earnings," said Colin Gillis, an analyst at BGC Partners in New York. "It's a company that's going to be driving earnings twice as fast as revenue."

Chambers said this quarter should see revenue growth between one percent and four percent, below last year's first quarter growth of 27 percent. Even with the modest growth forecast, Chambers sounded a note of caution: "We all see the uncertainty in the global markets. It is too early to determine the effects on capital spending," he said, adding the company would "be conservative on our expectations."

For more:
-see this WSJ report
- see this release

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