SAN FRANCISCO – Cisco Systems Inc.’s quarterly earnings surged 20 per cent in the latest sign that a recently completed overhaul is paying off for the world’s largest maker of computer-networking equipment.
The results released Wednesday also may help ease worries that Cisco’s comeback might be derailed by a sluggish economy, particularly in Europe.
Cisco earned $2.2 billion, or 40 cents per share, during its fiscal third quarter, which spanned February through April. That compared with net income of $1.8 billion, or 33 cents per share, at the same time last year.
If not for certain accounting items unrelated to its ongoing business, Cisco would have earned 48 cents per share. On that basis, Cisco’s earnings were a penny above the average estimate among analysts polled by FactSet.
Revenue rose 7 per cent from last year to $11.6 billion, matching analyst projections.
The solid showing largely reflected the savings from a roughly $1 billion reduction in annual expenses that Cisco CEO John Chambers wrangled last year by laying off workers and jettisoning operations that he believed were distracting the company from its main business of selling computer-networking equipment.
“We are successfully executing against our long-term strategic plan of growing profit faster than revenue, and in a cautious (technology) spending environment, we continue to outperform our competitors,” Chambers said in a statement.
Investors evidently were hoping for a stronger quarter. After the numbers came out, Cisco shares shed 54 cents, or nearly 3 per cent, to $18.24 in extended trading.