Cisco's Profits Rise 16%, Revenue Up 10%

Cisco Systems Inc. today reported a 16 percent increase in profits and 10 percent rise in revenue compared to a year ago. The San Jose-based company reported net income of $1.4 billion or 21 cents per share, compared with $1.2 billion or 17 cents per share for the third quarter of fiscal 2004, and compared with $1.4 billion or 21 cents share for the second quarter of fiscal 2005.

John Chambers, president and CEO, Cisco Systems, called it a "solid quarter," and said that IP telephony had contributed $1 billion in revenue, for a 35 percent year-over-year growth for that technology. It was the first quarter that IP telephony had crossed the $1 billion point. Chambers claimed that Cisco will soon be the largest provider of overall enterprise telephony.

Chambers also noted that Cisco's service provider market segment experienced "outstanding performance," was Cisco's fastest growing segment for the quarter, and was up 20 percent compared to last quarter, and up 25 percent year to year overall.

Advanced technology revenue was down two percent compared to last quarter. Chamber attributed this in part to very high growth in the last quarter, and to a normal seasonal downturn, especially in the home networking market.

Revenue for the quarter was $6.19 billion, compared to $5.62 billion a year ago. The results were in line with analyst expectations, who were expecting the San Jose-based company to report earnings of approximately 22 cents a share on sales of $6.16 billion."Today's results are a clear indication that our integrated technology strategy is working -- customers are realizing the benefits of an intelligent network architecture," Chambers said in a statement. "The long-term momentum we are seeing across product families, geographies and market segments clearly points to Cisco's strong competitive advantage."

Chambers added, "As we continue to manage the business for long-term growth, we are pleased with our very solid results in what is typically a seasonally challenging quarter. Customers are experiencing how the network can provide tremendous value to their businesses. We are seeing service providers, in particular, realize the true power of IP networking in delivering comprehensive products and services to their end users, with Cisco as a key business partner every step of the way."

The company reported that cash flows from operations were $1.9 billion for the third quarter of fiscal 2005, compared with $2.4 billion for the third quarter of fiscal 2004, and compared with $1.8 billion for the second quarter of fiscal 2005.

Among the highlights the company reported were being chosen as a preferred supplier by British Telecom to build its 21st Century Network, an agreement to buy the VoIP firm Sipura Technology, and the introduction of 10 new products, software enhancements and services across its security product portfolio, including new intrusion prevention, application firewall, SSL VPN, and endpoint security innovations.

Cisco also noted that Linksys had shipped more than one million VoIP ports in six months to the consumer market.0