Cisco profit rises

Cisco Systems Inc, the largest maker of Internet equipment, said on Tuesday fourth-quarter profit rose by 12 percent but its revenue forecast fell shy of Wall Street expectations and shares fell 4 percent after hours. Net income for its fiscal fourth quarter ended July 30 rose to $1.54 billion, or 24 cents per share, from $1.38 billion, or 20 cents, a year ago, the company said. Revenue rose 11 percent to $6.58 billion from $5.93 billion.
Though Cisco continued to generate strong results, with demand broadly based across its products and geographies, investors said that for the company's shares to move higher Cisco needs to deliver consistent revenue growth above what it has been delivering. So far this year, shares of Cisco are little changed.
Later on Tuesday in an interview, Cisco's Chief Executive John Chambers said he did not "believe large acquisitions work," dispelling speculation earlier this week that Cisco was mulling a bid for mobile phone maker Nokia
"I was surprised the market gave it any credence at all," said Chambers, reiterating Cisco's long-held strategy of acquiring small, most-often private companies for technology it does not already have.
Asked about the company's results and outlook, Chambers said: "Very simply, our strategy is working and we're out-executing our competition," Chambers said.
In a conference call with analysts, Chambers said that in the fourth quarter Cisco fulfilled a pledge made nearly four years ago to boost revenue per employee to $700,000 from $442,000 per worker at that time.
Cisco's gross margin - the percentage of revenue left after subtracting product costs - in the quarter was 68 percent, higher than the company's forecast for fourth-quarter gross margin of about 67 percent.
Excluding items, Cisco said it had a profit of 25 cents per share. On that basis, analysts on average had expected a profit of 24 cents per share on revenue of $6.56 billion, according to Reuters Estimates.
In the fourth quarter, routers, which direct traffic on the Internet, accounted for $1.48 billion, or 22 percent of total revenue. Switches revenue was $2.66 billion, or 40 percent of revenue. Advanced Technologies, such as Internet telephony and home networking gear, revenue was $1.16 billion, or 18 percent of Cisco's total revenue in the quarter. For the current quarter, Cisco expects revenue to rise about 10 percent from the year-ago period, Chambers told analysts. That implies revenue of about $6.57 billion.