Cisco tops estimates, boosts buyback

First-quarter net income was US$1.79 billion, or 30 cents a share, Cisco said Wednesday in a statement. Excluding stock compensation and some other costs, profit was 36 cents, beating the 31 cents estimated by analysts in a Bloomberg survey. The company also predicted a rebound in sales in the current period after four straight quarters of declines.

Cisco has benefited from a cost-cutting plan that Chief Executive Officer John Chambers undertook during the recession. He froze hiring, merged offices and cut business travel to cope with slumping sales. Orders are now beginning to pick up again as both corporate customers and phone carriers deal with growing traffic on their networks.

“Spending on data-networking gear is a tide that will lift all boats,” said John Krause, an analyst for Thrivent Financial for Lutherans in Appleton, Wisconsin, which owned 4.4 million Cisco shares as of Sept. 30, according to Bloomberg data.

Cisco, based in San Jose, California, rose 87 cents, or 3.7 percent, to US$24.16 in late trading after the results were released. The shares, up 43 percent this year, closed at US$23.29 on the Nasdaq Stock Market. Revenue fell 13 percent to US$9.02 billion in the period ended Oct. 24 from a year earlier. Analysts had estimated US$8.74 billion. The company reported net income of US$2.2 billion, or 37 cents a share, in the year-earlier period.

Sales will grow 1 percent to 4 percent this quarter from a year earlier, Cisco said on a conference call. The “economic recovery is well under way,” Chambers said on the call. As a result, Cisco is basing its forecasts on “an optimistic expectation,” he said.

The plan to repurchase more stock builds on previous commitments to buy back as much as US$62 billion. Including the additional repurchases, Cisco has about US$13.1 billion available in its buyback program.

Cisco has announced four acquisitions and a joint venture since Oct. 1, living up to a pledge by Chambers last month to get more aggressive in mergers and partnerships. The company is making more deals now because it expects the economy to recover, he said.

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