Cisco revenues increase as it expands share buyback scheme

Network equipment maker Cisco Systems has reported a 2 per cent increase in quarterly revenue, and says it will add $15 billion to its share buyback programme. The US tech giant, whose equipment is the backbone of the internet, predicted sales that may beat some estimates, countering concern that corporate spending is falling off amid fears that the global economy is weakening.

Net income rose to $3.1 billion, or 62 cents a share, in the second quarter ended January 23rd, from $2.40 billion, or 46 cents a share, a year earlier. Revenue rose to $11.8 billion from $11.6 billion, excluding revenue from the customer premises equipment portion of the video connected devices business that was divested.

Cisco’s reach in computer networking makes its earnings an indicator of whether government and corporate budgets are tightening. While it is not predicting a surge in growth, its forecasts may be a sign that demand is not slowing as quickly as some investors had feared, according to Simon Leopold, an analyst for Raymond James and Associates. “Flat is the new up,” said Leopold,who has the equivalent of a buy rating on the stock. “Everybody knows the environment is difficult.”

Cisco’s stock rose as much as 6.3 per cent in extended trading. The company, which fell 17 per cent this year compared with a 9.4 per cent decline in the S&P 500 Index, had earlier closed down less than 1 per cent, to $22.51, in New York.

For the second quarter, which ended on January 23rd, net income was $3.1 billion, or 62 cents a share, compared with $2.4 billion, or 46 cents a share, in the same period a year earlier. Sales were little changed at $11.9 billion.

Excluding some costs, profit was 57 cents a share, compared with an average analyst prediction of 54 cents a share on sales of $11.8 billion.– (Bloomberg)