Cisco Results Narrowly Beat Estimates

(RTTNews) - Cisco Systems, Inc. (CSCO), the world's largest computer networking gear maker, said Wednesday after the markets closed that its third quarter profit rose 12% from last year, helped by higher revenue and improved gross margin.

The company's quarterly earnings per share, excluding items, beat analysts' estimate by a penny and its quarterly revenue just managed to beat analysts' forecast.

"Cisco is in a very strong position and we delivered another solid quarter. Our vision and strategy are working and we are executing very well in a tough environment, as evidenced in our revenue growth, profitability, strong gross margins and cash generation," said John Chambers, Cisco chairman and CEO.

Cisco shares are currently losing 0.51% in after hours trading after closing the day's regular trading session at $29.35, up 12 cents. The shares trade in a 52-week range of $22.49 to $30.31.

Cisco is aggressively pursuing the acquisition-led growth strategy, diversifying its business and entering consumer markets. Cisco is viewed as a technology-industry bellwether because it dominates the market for routers and switches. Since the company's latest results are for the full month of April, instead of March for many of the technology giants, they are also seen as an early indicator of industry trends.

This is Cisco's last quarterly results with Chambers CEO, as he prepares to hand over reigns to another company veteran Chuck Robbins. The company said earlier this month that Robbins would succeed Chambers as CEO on July 26. Chambers, who has been the company's CEO since 1995, will remain as executive chairman.

For the third quarter ended April, 2015, the San Jose, California-based company reported net income of $2.4 billion or $0.47 per share, compared to $2.2 billion or $0.42 per share for the year-ago quarter.

Excluding items, adjusted net income for the third quarter was $2.8 billion or $0.54 per share, compared to $2.6 billion or $0.51 per share in the prior year quarter.

On average, 34 analysts polled by Thomson Reuters expected the company to earn $0.53 per share for the third quarter. Analysts' estimates typically exclude special items.

For Cisco, this marks the second consecutive quarter of year-over-year profit growth following five quarters of declines. The company had been struggling with rising costs that threatened to derail its earnings growth. To reduce costs, the company cut thousands of jobs. Cisco said in August that it would cut up to 6,000 jobs starting in its fiscal first quarter.

Gross margin for the quarter improved to 62.0% from 60.7% a year earlier.

Cisco, which makes the routers and switches that direct computer and telecommunications traffic over corporate networks and the Internet, said total revenue for the third quarter rose 5.1% to $12.14 billion from $11.55 billion in the same quarter last year. Thirty-two analysts had a consensus revenue estimate of $12.07 billion for the third quarter.

Product revenue for the quarter increased 5.8% to $9.3 billion, while service revenue grew 2.9% to $2.8 billion.

During the third quarter, Cisco repurchased about 35 million shares of common stock for an aggregate purchase price of $1.0 billion. The remaining authorized amount for stock repurchases as of April 25 was about $5.3 billion with no termination date.

Cisco's balance sheet looked rock solid. The company ended the third quarter with cash and cash equivalents and investment of $54.4 billion, compared with $53.0 billion at the end of the second quarter and $52.1 billion at the end of the fourth quarter of fiscal 2014.