Cisco revenue, profit rose in fiscal Q1

The company's revenue jumped 19 percent despite economic challenges, Cisco reported

Cisco Systems posted gains in both profit and revenue on Wednesday for its fiscal first quarter that ended Oct. 30, despite what it called "a challenging economic environment."

However, the company missed its internal projection for product orders by about US$500 million, largely because of weakness in Europe, the public sector and the cable set-top box business.

On a conference call to discuss the results, Chairman and CEO John Chambers said Cisco had run into some surprises in the quarter, including how fast government purchases fell off, but expressed confidence in the company's overall progress.

"We've got a couple of air pockets that we've hit," Chambers said. "This is minor bumps in terms of the direction where we're going to head as a company."

On the conference call, Cisco forecast revenue growth of 3 percent to 5 percent for the current quarter but predicted the full fiscal year 2011, ending in July 2011, would show revenue gains between 9 percent and 12 percent compared with the previous year. The company's long-term target for quarterly revenue gains is between 12 percent and 17 percent.

In the first quarter, Cisco's revenue hit US$10.75 billion, up about 19 percent from its $9.02 billion a year earlier. Net income increased by 13 percent, reaching $1.9 billion, or $0.34 per share.

Not counting certain one-time items, Cisco earned $0.42 per share, surpassing the consensus forecast of $0.40 per share by analysts surveyed by Thomson Reuters.

Budget cuts hit spending in the public sector, which typically represents 22 percent of Cisco's revenue, Chambers said. The impact was felt in many parts of the world, he said. In the U.S., purchases by states fell significantly while local spending fell slightly, and federal purchases grew. In the cable business, where Cisco sells the set-top boxes that consumers use to connect their TVs to cable networks, Motorola gained some market share against Cisco, the company acknowledged.

Cisco also fell short with its security products, where sales fell 2 percent from a year earlier. Chambers said the company has been working on improving its security lineup over the past several months.

However, Chambers said business was good in Cisco's core businesses and some critical new categories. Router revenue increased 13 percent from a year earlier and switch revenue grew 25 percent. In the data-center product segment, where Cisco is challenging Hewlett-Packard and other big rivals with both server and networking products, revenue jumped 59 percent in the quarter.

The company's UCS (Unified Computing System) server lineup logged year-over-year growth of 550 percent, compared with a very early period in the rollout of UCS. The company now claims 2,800 customers for UCS and said more than 40 customers have bought more than $1 million worth of UCS gear.

Revenue from collaboration products rose 45 percent in the quarter. Chambers claimed he has seen a "tipping point" in CIOs' views of enterprise video collaboration over the past six months. They are recognizing that video can help them improve productivity and change their business processes, he said.

Cisco said it has added about 1,900 employees to its ranks during the quarter and has hired about 600 additional sales representatives in the past two quarters.

The company's shares on the Nasdaq stock market were down $3.05 at $21.23 in after-hours trading late Wednesday. The stock had gained $0.14 during the regular trading day.

Join the PC World newsletter!

Error: Please check your email address.

Tags business issuesCisco SystemsGovernment use of ITtelecommunicationserversNetworkinghardware systemsfinancial resultsgovernment

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Stephen Lawson

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?