Cisco Posts Lower Net Profit but Sales Beat Forecasts

Cisco Systems Inc. (CSCO), the world's largest maker of equipment that directs Internet traffic, Tuesday posted a lower quarterly profit after an accounting charge, but sales rose more than expected as corporate customers boosted technology spending. It is becoming increasingly clear that the global economy is improving," Cisco President and Chief Executive John Chambers said in a statement. However, Cisco shares fell 1.2 percent in after-hours trade to $26.10 from a Nasdaq close of $26.41. Investors see Cisco as a benchmark for corporate and government spending because about 75 percent to 80 percent of its revenue comes from those customers. The rest comes from the telecom sector, where spending by telephone companies appears to be stabilizing and even increasing in areas Cisco serves, including Internet voice transmission. The San Jose, Calif., company reported a net profit in its fiscal second quarter of $724 million, or 10 cents a share, compared with $991 million, or 14 cents a share, in the year-ago quarter. The quarter included a one-time noncash charge of $567 million, or 8 cents a share, related to a charge for an accounting change related to an acquisition. Excluding one-time items, Cisco's profit was 18 cents a share. Sales in the quarter ended Jan. 24 rose by almost 15 percent from last year to $5.4 billion and were up 5.8 percent from the previous quarter.