Cisco Systems posted higher-than-expected quarterly earnings as the US network equipment maker managed to contain costs, even as revenue fell for the first quarter in more than five years.
Shares of Cisco rose nearly 2 per cent in cautious trade ahead of the company's earnings conference call, where chief executive John Chambers is expected to outline his outlook.
Mr Chambers said in a statement that Cisco intends to "accelerate the alignment of our resources" and gradually decrease operating expenses.
Net profit for the fiscal second quarter ended January 24th fell to $1.5 billion, or 26 cents per share, from $2.1 billion, or 33 cents a share.
Profit excluding items fell to 32 cents a share from 38 cents, exceeding the market's average forecast of 30 cents a share according to Reuters Estimates.
"The numbers look pretty good, all things considered in the tough environment. The EPS beat shows strong cost containment in an environment of reduced demand," said Mark Sue, analyst at RBC Capital.
Revenue fell 7.5 per cent to $9.1 billion, the first year-on-year decline since 2003, as the economic downturn forced companies to cut back on technology spending.
Wall Street analysts on average had expected revenue of $9.0 billion, according to Reuters Estimates. In November, Cisco forecast a 5 to 10 per cent year-on-year decline.
The results and outlook are closely watched as an early indicator of changes in technology spending. Cisco is one of the first high-tech companies to report results that include most of January.
Reuters