China Boosts Cisco's Q3 Results

Cisco posted a solid set of Q3 results tonight, although strength in China and India was offset by weakness in U.S. sales.

Cisco reported Q3 revenues of $9.8 billion, up from $8.9 billion in the same period last year, and above analyst estimates of $9.75 billion.

On a GAAP basis, Ciscos reported earnings per share of 29 cents on net income of $1.8 billion, down from 30 cents and $1.9 billion in the same period last year.

Cisco’s non-GAAP earnings were 38 cents on net income of $2.3 billion, up from 34 cents and $2.1 billion in the third quarter of 2007. Analysts had estimated an EPS of 36 cents.

”This quarter was another solid quarter given the challenges we’re all witnessing – from a U.S. perspective the market did soften,” said Cisco CEO John Chambers, during a conference call earlier today. “[But] we continue to be optimistic about most of the global economies outside of the U.S – Asia Pacific got stronger.”India and China were particular highlights, according to Chambers, who pointed to year-over-year growth in the mid-teens, and high-thirties, respectively. In contrast, Cisco’s U.S. growth was stuck in the mid single digits.

”We’re continuing to see our U.S. and some European customers remain cautious,” said the exec, hinting that the slew of technology projects currently underway in China could more than plug this gap. “We believe that we’re uniquely positioned with [Chinese] business and government leaders.”

On the product side, Cisco’s router business grew 14 percent, led by its high-end routers, and its storage business, which includes its MDS switches, grew 5 percent year-over-year. The vendor’s Application Networking division, which includes Wide Area Application Services (WAAS), was less robust, growing 3 percent year-over-year.

The Cisco CEO admitted that the vendor’s switching sales were something of a mixed bag, with low double digit growth in fixed switches offset by a “negative” performance in modular switches, thanks partly to “uncertainty” following the introduction of the Nexus series of fabric switches.

“It will take a while in the data center before our volumes pick up,” he said. “It will take a while, just like the CRS took a while before customers put it in the middle of their networks.”The exec nonetheless re-affirmed Cisco’s commitment to the Nexus family of switches, which form the core of the vendor’s Fibre Channel over Ethernet (FCOE) efforts.

“[The Nexus 7000] is the first in a new generation of unified fabric data center switches,” he said.

Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.