Cisco's turnaround efforts had a positive effect on fiscal Q2 results

Cisco's (Nasdaq: CSCO) moves to realign the company's focus throughout 2011 appear to be showing their effects in the vendor's second quarter as earnings rose 27 percent over the same period in 2010, surpassing analyst expectations.

Net income for its fiscal quarter ending Jan. 28 grew 43.5 percent, while revenue increased 11 percent to $11.5 billion, surpassing not only the initial forecast it issued in November, but also Wall Street analyst projections of $11.23 billion.

John Chambers, CEO and chairman of Cisco, said during the company's the earnings call that the results illustrated strength throughout all of its product lines, not just its routing and switching business.  

"Our vision and strategy are working very well...It's a continuous journey and we're making good progress on it," Chambers said during the call. "We saw record revenues, earnings, growing profits faster than sales. I don't think it could have been a much better quarter in terms of the trends."

Chambers added that the company's much needed cost-cutting program, which either closed or sold underperforming segments like its Flip Camera business and laid off 10,000 employees, enabled it to achieve its $1 billion expense reduction target one quarter ahead of schedule.

With $5 billion in cash on hand, Chambers said that the company may reignite its M&A strategy that it put on hold during the restructuring process.  

"We've used acquisitions as a part of our strategy for most of our history. We've been at this longer than most in the industry, and we believe we are very good at it," he said. "We expect to be more active with acquisitions in the quarters and years to come, selectively adding to our portfolio...As we have in the past, we continue to be disciplined and thoughtful in regards to price, value and strategic fit to meet our approach to M&A."

The vendor will likely make acquisitions to enhance its video and cloud infrastructure initiatives.

During the quarter it introduced CloudVerse, a framework designed to help enterprises build, manage and connect public, private and hybrid clouds. At the same time, it acquired BNI Video, a provider of back-office and content delivery network (CDN) analytic capabilities.

For more:
- see the release
- The Wall Street Journal has this article

Special Report: Wireline in the fourth quarter 2011

Related articles:
Cisco plans more M&As as strong Q2 tops expectations
Cisco could buck rivals' struggles with strong fiscal Q2 performance
Infonetics: Cisco regains lead in IP Edge router and switch market, while Huawei slides
Booming data market to spur tech M&A frenzy in 2012

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