By Nathalie Tadena
Cisco Systems Inc.'s (CSCO) fiscal second-quarter earnings
jumped 44% as tax benefits boosted the network-equipment maker's
results and as revenue strengthened.
Core earnings topped the company's expectations.
Cisco has now reported five consecutive quarters of
year-over-year earnings growth after the company stumbled in 2011,
delivering underwhelming results that triggered a massive
restructuring effort to focus on core product areas such as routing
and switching gear that shuttle data between computers. Its recent
results have been helped by lower operating costs, though operating
expenses increased slightly in the latest period.
Cisco, often seen as a bellwether for the technology industry as
it sells networking gear to a broad swath of customers, also faces
ongoing weakness in Europe and soft demand from public-sector
organizations.
For the quarter ended Jan. 26, Cisco posted a profit of $3.14
billion, or 59 cents a share, up from $2.18 billion, or 40 cents a
share, a year earlier. The latest period included a 17-cent gain
related to a tax settlement with the Internal Revenue Service and
related to the reinstatement of a federal research and development
tax credit. Excluding stock-based compensation expenses,
amortization and other items, per-share earnings rose to 51 cents
from 47 cents. Revenue rose 5% to $12.1 billion.
In November, Cisco projected core earnings of 47 cents to 48
cents a share and revenue growth between 3.5% and 5.5%.
Gross margin narrowed to 60.7% from 61.3%.
Revenue from the product segment, Cisco's biggest top-line
contributor, improved 3.5%, while revenue from its services segment
increased 10%.
Operating expenses were up 4.5%.
Shares were up 1.3% to $21.40 in recent after-hours trading. The
stock is up 25% over the past three months, through the close.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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