Cisco Profit Surges, But Outlook Weak - Update

(RTTNews) - Cisco Systems Inc. (CSCO), the world's largest computer networking gear maker, Thursday reported a 33% surge in first-quarter profit, helped by higher revenues and absence of asset impairment charges.

The company's quarterly earnings and revenues trumped Wall Street estimates, but its outlook for the current quarter is below expectations.

San Jose, California-based Cisco's first-quarter profit rose to $2.4 billion or $0.48 per share from $1.8 billion or $0.35 per share last year.

Adjusted earnings improved to $0.59 per share from $0.54 per share last year. On average, 35 analysts polled by Thomson Reuters expected earnings of $0.56 per share. Analysts' estimates typically exclude special items.

Cisco, which makes routers and switches, said revenues for the first quarter rose 3.6% to $12.68 billion from $12.25 billion last year. Analysts had a consensus revenue estimate of $12.65 billion.

Cisco is viewed as a technology-industry bellwether because it dominates the market for routers and switches. Cisco CEO Chuck Robbins took over the reigns of the company from John Chambers this summer. Since his appointment, Robbins has aggressively pursued acquisitions to expand the company's market.

Few days ago, Cisco signed a global business and technology partnership deal with Swedish mobile network equipment maker Ericsson (ERIC). Last month, Cisco agreed to buy Lancope Inc., a privately held network security company for $452.5 million.

During the first quarter, Cisco completed the acquisitions of OpenDNS, MaintenanceNet, and Pawaa Software. Cisco also recently announced the acquisitions of Portcullis, ParStream, and 1 Mainstream, all of which are expected to close in the second quarter.

Moving ahead, the company expects third-quarter adjusted earnings of $0.53 to $0.55 per share and revenue growth of flat to 2%. Analysts currently estimate earnings of $0.56 per share and revenue growth of 5.10%.

"Our guidance reflects lower than expected order growth in Q1, driven largely by the uncertainty of the macro environment and currency impacts," Robbins said.

CSCO closed Thursday's trading at $27.83, up $0.01 or 0.04%, on the Nasdaq. The stock further dropped $1.09 or 3.92% in the after-hours trade.