Cisco Posts Solid First Quarter Results

Bellwether technology giant Cisco Systems Inc. lifted the curtain on its
first quarter earnings Monday afternoon, revealing that the company reached
revenues of $6.52 billion — a 66 percent increase over revenues for the
same period the previous year.

Pro forma net income was $1.36 billion or 18 cents per share for the first
quarter of fiscal 2001, a penny over what many analysts had expected the
giant to post and a significant increase over the first quarter of 2000’s
net income of $814 million or 11 cents per share.

Actual net income for the first quarter of fiscal 2001 was $798 million or
11 cents per share, compared with $415 million or 6 cents per share for the
same period last year.

Bernstein & Co. analyst Paul Sagawa said Cisco is in no way immune to the
stock market and he expects some investor squeamishness spawned by company
statements that its growth rate would decelerate from an impressive 70
percent to 30 to 50 percent over several quarters.

The company, whose stock has dropped to the mid-$50s from July when it
hovered around the $70 mark, has also cited that telecommunications customer
spending has slowed. And, once the dominant force in the router market,
Cisco has also come up against stiff competition from Juniper Networks
despite its new SOHO 77 ADSL router, which provides small office users with
secure Internet access over a single DSL line and ADSL WAN interface card.

In a live conference call Monday afternoon, President and Chief Executive
Officer John Chambers said Cisco enjoyed a fortunate quarter in the face of
these challenges. He also attributed the company’s success to the balance of
earnings across its three major divisions, which he stressed drew double
digit growth, as did the firms sales in five major geographies.

Cisco, which is on pace to scoop up its usual number of 20 to 25 companies
per year with such purchases as IPmobile Inc., Komodo Technology Inc. and
Netiverse Inc., targets the service provider marketplace, enterprise and the
small- and medium-sized market.

It is perhaps in the service provider marketplace that Cisco faces its
toughest obstacles, as the firm is trying to come from behind heavyweights
such as Lucent Technologies Inc. and Nortel Networks in the optical
networking arena.

The company has gained momentum for its optical solutions this past year
with BellSouth selecting its IP+optical strategy to build an exchange. Also,
Cambrian announced the first Cisco end-to-end IP+optical network.

“We are very pleased with the solid balance across our major geographies,
lines of business, and product families,” Chambers said.

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