On Tuesday, Cisco released its quarterly financial report, and the numbers surprised many Wall Street analysts, exceeding their expectations. The company's share price rose on Wednesday following the news.
The Wall Street Journal's Ben Worthen reported, "Cisco Systems Inc. posted an 18% profit jump and a 5.5% revenue increase for its fiscal first quarter, but showed some weakness in its core networking business that was partly caused by the tough economy in Europe. On a call with analysts Tuesday, Cisco Chief Executive John Chambers called the economy 'challenging.' Over the summer, Cisco said the economy was improving in the U.S. and that customers were more willing to buy. That continued into the autumn, with Mr. Chambers noting that Cisco was able to close more big deals in the U.S. during the quarter. But while business was healthy in the U.S., he said he expected 'Europe to get worse before it gets better.'"
Bloomberg's Jordan Robertson added, "Cisco Systems Inc. (CSCO), the biggest maker of computer networking equipment, rose the most in almost three months after its profit topped analysts’ estimates, price reductions helped spur sales and cost cuts kept margins intact. The shares jumped as much as 8.3 percent today after Cisco said in a statement yesterday after markets closed that profit excluding some costs was 48 cents a share in the first fiscal quarter ended Oct. 27. Analysts anticipated 46 cents a share, the average of data compiled by Bloomberg."
And eWeek's Jeffrey Burt noted, "In the fiscal first quarter, Cisco saw revenue in both its core switching ($3.6 billion) and router ($2.1 billion) businesses—which account for almost half of all revenue—fall 2 percent, though the company saw solid sales of its Nexus line of switches, Chambers said. Still, much of that was offset by strong numbers in other business segments. Cisco's data center revenue jumped 61 percent, while the enterprise business grew 54 percent. Sales of video technology—helped by the closing of Cisco's $5 billion acquisition of NDS Group—increased 30 percent. That said, Cisco's collaboration business—which includes such products as the telepresence equipment, WebEx online meeting technology and Jabber software—fell 8 percent from the same quarter last year."
Reuters observed, "Cisco's quarterly results stand out as one of the best among technology companies, especially when tech results on an average 'have been nothing short of awful,' Topeka Capital Markets analyst Brian White said in a note. 'The combination of last night's performance and Cisco's attractive valuation should garner the attention of more value- investors,' he said."