Cisco Systems, a leader in networking for the internet, last night announced that its earnings had surged 50 per cent in its fiscal second quarter as the leading maker of networking equipment outperformed rivals despite overall weak demand for high-tech equipment.
But executives warned the company expects sales to be flat or fall as much as 3 per cent in the current quarter, usually its weakest, because of political uncertainties around the world and the struggling economy.
For the three months ended January 25th, Cisco earned $991 million, or 14 cents per share, on sales of $4.7 billion. In the same period last year, the company earned $660 million, or 9 cents per share, on sales of $4.8 billion.
Excluding special items, Cisco earned $1.1 billion, or 15 cents per share, compared with a profit of $664 million, or 9 cents a share in the same period last year. Analysts were expecting fiscal 2003 second-quarter profits of 13 cents per share on sales of $4.7 billion.
In November, Cisco said second-quarter sales would be flat or slightly lower than the $4.85 billion reported in its fiscal first quarter.
Cisco was hit hard by the meltdown in spending by large corporations as well telecommunications companies, which drove much of its growth in the late 1990s.
To compensate, the company has dramatically cut costs and focused more attention on other business opportunities. Two years ago, it cut 8,500 jobs.
The company managed to improve its profits, even as revenue declined, by controlling costs. Gross margin improved to 70.4 per cent from 69.3 per cent in the fiscal first quarter, said Larry Carter, the company's chief financial officer.