NEW YORK (Reuters) - Cisco Systems posted quarterly results that beat Wall Street forecasts and said it expected the weak economic environment to be relatively short term, sending its shares up 6 percent on Tuesday.
Investors took heart from Chief Executive John Chambers’ comment that he had “very strong” confidence in Cisco’s long-term revenue growth target of 12 percent to 17 percent, even though the company’s quarterly forecasts were a little light compared with average analyst estimates.
Cisco, which sells routers and switches that direct Web traffic, has benefited from companies needing to upgrade their networks to meet growing Internet use, despite the weak U.S. economy.
Its profit for the fiscal fourth quarter ended July 26 rose to $2.0 billion (1 billion pounds), or 33 cents a share, from $1.9 billion, or 31 cents a share, in the year-ago quarter. Earnings excluding items rose was 40 cents per share, exceeding the average analyst forecast by a penny, according to Reuters Estimates.
Quarterly revenue rose 9.9 percent to $10.4 billion, surpassing $10 billion for the first time. Analysts on average had expected revenue of $10.3 billion.
“It was a solid clean result,” said Mark McKechnie, an analyst at American Technology Research.
Chambers said he saw mixed signals in the economy, stock market and energy costs. But he said this was a “relatively short term challenge” and his best estimate was the current environment would last a few more quarters.
While the veteran technology executive avoided giving a full-year outlook for the fiscal year that just began, he forecast revenue growth of 8 percent in the first quarter and 8.5 percent in the second quarter.
Wall Street on average was looking for first quarter revenue growth of 8.8 percent and second quarter of 9.5 percent, according to Reuters Estimates.
“The outlook was modestly below expectations,” said Piper Jaffray analyst Troy Jensen.
Cisco shares were up 6.5 percent at $24.13 in extended trading, after gaining 3 percent in Nasdaq trading to close at
But the stock is still down around 23 percent from a year earlier amid worries the weak U.S. economy could drag down spending on network equipment.
“Cisco will always be affected by economic changes,” Chambers said on a conference call. “During each economic slowdown, Cisco has always navigated through them very effectively gained wallet share and in my opinion market share.”
Chambers reaffirmed his customers saw conditions recovering early next year.
The company said on Tuesday that emerging market orders grew around 10 percent in the July quarter, whereas orders in the United States and Canada grew 7 percent. European orders grew 11 percent.
Additional reporting by Sinead Carew; Editing by Andre Grenon
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