Posted By John Rath On May 13, 2010 @ 7:58 am In Cisco | 1 Comment
Networking giant Cisco Systems (CSCO) is often seen as a bellwether for technology spending by major corporations. As infrastructure spending rebounds, expectations are rising as well. That’s probably why Cisco reported strong third quarter results  yesterday, only to see its shares decline in off-hours trading.
Cisco’s third quarter net sales for the period ending May 1 rose 27 percent to $10.4 billion, besting analyst expectations of $10.2 billion. The company has $39 billion in cash and cash equivalents, and said it has spent approximately $62.7 billion on the stock repurchase program since its inception.
“Our net income in the quarter grew to $2.2 billion on a GAAP basis, representing solid growth of 63 percent year over year,” said Frank Calderoni, chief financial officer for Cisco. “This stability in our earnings, coupled with strong margins, is contributing to our continued strategic ability to generate cash in the business.”
Last quarter CEO John Chambers said Cisco was entering the second phase of the economic recovery. This quarter he said “we emerge from this downturn gaining market share, a larger share of the total wallet spend of our customers, dramatically improved customer relations as a trusted technology and business partner, and having next-generation products in almost every product category. It is clear that our game plan for how to handle economic downturns is hitting on all cylinders.”
The key business highlights for the third quarter included launching an initiative with VMware and the completion of the TANDBERG acquisition. A key product announcement was the introduction of the Cisco CRS-3  Carrier Routing System in March. The ASR 5000 and a new series of of fixed-switching Catalyst lines were also introduced. Customer announcements during the third quarter reflected the global footprint Cisco has, with partnerships and agreements announced in Nigeria, Netherlands and Austrailia.
With $39 billion in the bank and movements in 30+ new market adjacencies, Cisco is poised to pick up the pace on acquisitions throughout the rest of 2010. IBM CEO Sam Palmisano said Wednesday  that he plans to spend $20 billion on acquisitions in the next five years.
Chambers maintained a conservative outlook for the fourth quarter, and investors Wednesday shared that sentiment. Even with accolades for the positive earnings report the stock only gained 3 percent, closing at $26.74. In off hours trading, Cisco shares were off about 1.7 percent.
Article printed from Data Center Knowledge: http://www.datacenterknowledge.com
URL to article: http://www.datacenterknowledge.com/archives/2010/05/13/cisco-surpasses-estimates/
URLs in this post:
 third quarter results: http://newsroom.cisco.com/dlls/2010/fin_051210.html
 said : http://newsroom.cisco.com/dlls/2010/fin_020310.html
 Cisco CRS-3: http://www.datacenterknowledge.com/archives/2010/03/09/cisco-unveils-high-capacity-crs-3-routers/
 said Wednesday: http://www.businessweek.com/news/2010-05-12/ibm-s-palmisano-to-spend-20-billion-on-takeovers-update1-.html
 John Rath: http://www.datacenterknowledge.com/archives/author/johnr/
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