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RealTime IT News

Service Providers Boost Cisco

Network equipment giant Cisco Systems said it had a "solid quarter" thanks to better-than-expected orders from service providers and government agencies.

CEO John Chambers also said strategies enacted over the last 18 to 36 months put the San Jose, Calif., company in a good position to grow as signs of an economic recovery begin to appear.

Cisco posted revenues of $5.1 billion, a 5 percent more than the same period last year, and an 8.5 percent increase from last quarter. Profit was $1.1 billion, or 17 cents per share, beating analysts' expectations.

In the router space, Cisco signed a significant deal with regional telecom carrier Verizon . Orders from U.S. carriers rose 10 percent over the previous quarter. Enterprises, including the retail and financial services segments, and government contracts, particularly in education and security, were also encouraging, Chambers said.

Linksys, the home network equipment maker Cisco bought for $500 million this year, tallied $119 million in revenue, in-line with company expectations. Home networking is a growth areas Cisco is investing in. Others include IP telephony, optical, wireless, security and storage products.

Most performed well, Chambers said, however, Cisco was disappointed with its foray into storage area networking, which saw slower than expected growth because of manufacturing issues and longer sales cycles.

Rachna Ahlawat, a principal analyst with Gartner, said Cisco's numbers are moving in the right direction.

"It is too early to say that the market is rebounding," Ahlawat told internetnews.com. "We have to see a couple of more quarters like this, not just from the leader, but other players as well."

Cisco competitors such as Nortel Networks and others have not been as upbeat about the market.