Cisco Q2 outlook beats cautious Street view

Wed Nov 9, 2011 5:46pm EST

A pedestrian walks past the Cisco logo at the technology company's campus in San Jose, California February 3, 2010. REUTERS/Robert Galbraith

A pedestrian walks past the Cisco logo at the technology company's campus in San Jose, California February 3, 2010.

Credit: Reuters/Robert Galbraith

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(Reuters) - Cisco Systems Inc forecast revenue and earnings above Wall Street expectations as demand from government and enterprises for its network equipment remained resilient despite global economic troubles.

Analysts had expected conservative quarterly guidance, given the economic uncertainty.

The world's biggest networking equipment maker projected a 7 to 8 percent rise in fiscal second-quarter sales, translating to $11.13 billion to $11.2 billion in revenue -- matching or slightly ahead of the $11.14 billion expected, on average.

Excluding items, Cisco predicted earnings per share of 42 to 44 cents in the quarter, beating the average forecast of 42 cents, signaling its months-long turnaround was bearing fruit.

But CEO John Chambers, who kicked off a months-long overhaul of the company to save $1 billion through layoffs and asset sales, warned that global uncertainty persists and it remains tough to predict market conditions.

"This report reflects solid execution by the company in a very challenging market environment," Ticonderoga Securities analyst Brian White wrote in a client note.

Cisco's shares extended gains after Chambers' comments, rising 4 percent to $18.30 in extended trade, after closing down 3.8 percent.

On Wednesday, Cisco reported quarterly earnings per share that beat estimates, signaling that efforts to revive growth are beginning to pay off.

The company on Wednesday reported adjusted earnings of 43 cents per share for the fiscal first quarter ended October 29, compared with the average analyst forecast of 39 cents, according to Thomson Reuters I/B/E/S.

Revenue rose to $11.3 billion from $10.75 billion a year earlier, versus the average forecast of $11.03 billion.

"We weren't expecting fireworks for this quarter. I knew the company would control costs efficiently and there's a little bit of revenue upside," BGC analyst Colin Gillis.

"What we still need is the guidance and we only hear that later on the conference call," he added.

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