Profits Down at Cisco

The cost of expensing stock options meant that Cisco has posted a slightly lower quarterly profit figures with net income in the first quarter of its fiscal year was $1.3bn, down from $1.4bn a year ago. With the stock options excluded profits rose to $1.6bn – ahead of estimates.

Revenues were driven by increased customer spending on internet phones, fuelling revenues gains at its advanced technologies division. This helped offset slowing sales growth from routers and switches, which account for over 60% of Cisco’s sales.

“Q1 was a solid quarter for Cisco, with balanced execution across most of our geographies, market segments and product categories,” said John Chambers, president and CEO, Cisco Systems, Inc. “We are especially pleased with the improving business momentum in the U.S. and Asia Pacific, the strength of our product families and the accelerated growth of the commercial marketplace, which has become our fastest growing customer segment.”

Chambers continued, “Cisco’s long-term product architecture strategy is taking hold. We are seeing an increased trend toward customers choosing integrated networking solutions that combine our core products with advanced technologies. By coupling routing and switching with our advanced technologies such as security, enterprise IP communications and wireless, Cisco’s architectural approach is allowing customers to more effectively scale their IT operations. Going forward, we will continue to foster a culture of innovation, incorporating internal development, acquisitions and partnerships to anticipate the evolving needs of customers and extend our core competitive advantage.”