Cisco exceeds projections, fiscal Q1 revenues up 5.5%

Price cuts drove sales in competitive market
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Cisco (Nasdaq: CSCO) reported on Tuesday that fiscal Q1 revenue rose 5.5 percent to $11.9 billion, slightly exceeding analysts' projections of $11.8 billion.

Company net income was $2.1 billion, up 18 percent year over year, or 39 cents a share, from $1.78 billion, or 33 cents, in the same period a year ago.

Some of the key reasons for the positive quarter were Cisco's ongoing efforts to cut costs and equipment prices as it deals with ever-growing threats from rivals such as Juniper (NYSE: JNPR) and Hewlett Packard (NYSE: HPQ).

"We delivered record results this quarter--with revenue growth of 6 percent and strong earnings per share growth--demonstrating our vision and strategy are working," said John Chambers, chairman and chief executive officer, Cisco, in the earnings release. "Our innovation engine, operational discipline and ongoing evolution are enabling us to differentiate in the market."

As seen in previous quarters, the two dominant contributors of revenue and sales growth were Switching and NGN Routing units, which both rose 2 percent to $3.6 and $2.0 billion in the quarter, respectively.

The vendor also reported strong gains of 30 and 8 percent in, respectively, the service provider video and collaboration front, to $1.1 billion and $1.0 billion. Finally, while the data center segment is still relatively new, it grew 61 percent to $417 million.

From a regional perspective, Americas grew 2 percent, while EMEA and Asia-Pacific grew 10 and 7 percent. On the customer segment side, service provider and public sector saw the most growth of 3 and 6 percent.

Times haven't been easy for Cisco, however. In the previous quarter, a challenging economic environment and slower sales in some segments drove the San Jose, Calif. vendor to make some drastic changes. In July, the vendor cut 1,300 employees, or about 2 percent of its workforce, a move it says is designed to cut costs and simplify its overall structure.

Looking towards fiscal Q2 through January, the vendor forecast profit to be in the range of 47 to 48 cents a share, slightly higher than analyst forecasts of 47 cents. Cisco also forecast that revenue will climb 3.5 percent to 5.5 percent to $11.9 billion to $12.2 billion over 2011.

Shares of Cisco were trading at $17.89, up $1.03, or 6.14 percent, in late morning trading on the Nasdaq stock exchange.

For more:
- see the earnings release
- Bloomberg has this article

Special report: Wireline telecom earnings in the third quarter

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