Cisco Results Top Estimates; Boosts Dividend

(RTTNews) - Cisco Systems, Inc. (CSCO), the world's largest computer networking gear maker, said Wednesday after the markets closed that its second quarter profit rose 68% from last year, helped by higher revenue and improved gross margin.

The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue.

"Our Q2 results reflect continued progress as we transform Cisco to become the #1 IT company. In the quarter we grew revenues by 7%, with strong EPS growth, and saw the best balance of growth across all our geographies, products, and segments. We delivered this strong performance despite a volatile economic environment," stated Cisco chairman and CEO John Chambers.

Cisco also declared a quarterly dividend of $0.21 per share, a $0.02 or 11% increase over the previous quarter's dividend, to be paid on April 2 to all shareholders of record on April 2.

Cisco shares are currently gaining 5.38% in after hours trading after closing the day's regular trading session at $26.93, down 56 cents or 2.04%. The shares trade in a 52-week range of $21.27 to $28.70.

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 January, instead of December for many of the technology giants, they are also seen as an early indicator of industry trends.

For the second quarter ended January 24, 2015, the San Jose, California-based company reported net income of $2.4 billion or $0.46 per share, compared to $1.4 billion or $0.27 per share for the year-ago quarter.

Excluding items, adjusted net income for the second quarter was $2.7 billion or $0.53 per share, compared to $2.5 billion or $0.47 per share in the prior year quarter.

On average, 36 analysts polled by Thomson Reuters expected the company to earn $0.51 per share for the second quarter. Analysts' estimates typically exclude special items.

This marks the first time in six quarters that Cisco's quarterly profit has increased year over year. 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.

Cisco, which makes the routers and switches that direct computer and telecommunications traffic over corporate networks and the Internet, said total revenue for the second quarter rose 7% to $11.94 billion from $11.16 billion in the same quarter last year. Thirty-four analysts had a consensus revenue estimate of $11.80 billion for the second quarter.

Gross margin for the quarter improved to 59.4% from 53.3% a year earlier.

During the second quarter, Cisco repurchased about 44 million shares of common stock for an aggregate purchase price of $1.2 billion. The remaining authorized amount for stock repurchases as of January 24 was about $6.3 billion with no termination date.

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

During a conference call with analysts, Cisco forecast revenue growth of 3% to 5% and adjusted earnings of $0.51 to $0.53 per share for the third quarter. Analysts currently expect the company to earn $0.52 per share on revenue growth of 4% for the third quarter.