Cisco Touts IP Telephony, Home Networking

Cisco today said advanced technology products —
including Internet Protocol telephony and home networking offerings —
performed well in the second quarter, although some revenue concerns linger.

The network equipment giant posted net income of $1.4 billion, or 21 cents
per share, for the quarter, up from $724 million, or 10 cents per share, for
the second quarter of fiscal 2004.

Second-quarter revenues tallied $6.06 billion, an increase of 12 percent from the $5.4 billion in the year-ago quarter. The revenue figure was just
below the average of what Wall Street expected.

“We’re especially pleased with the balanced, ordered growth across core
routing and switching products and advanced technologies,” CEO John
Chambers said in a conference call with analysts and reporters.

Corporate adoption of Voice over Internet Protocol was a clear
highlight. During the second quarter, the company shipped 570,000 IP phones
to enterprise customers, an increase of nearly 100 percent, Chambers said.
Cisco is embarking on a new IP phone system for brokerage Merrill
Lynch, the company said.

In addition to IP telephony and home networking, the San Jose, Calif.,
company’s advanced technologies group includes optical networking,
security, storage area networking and wireless offerings.

As a whole, revenue for advanced technologies was up an average of 15 percent
sequentially, and 40 percent from the same period last year, Chambers said.
The company benefited from corporate orders for routers and switches during the quarter.

There were some areas that bear watching however, and Cisco expects
third-quarter revenues to be flat to up 2 percent. The company is also
watching general economic and capital spending trends in Germany, France and
Japan — important IT markets.

In addition, Cisco continues to be
mindful of the increasing challenge of low-cost competitors from Asia.
Chambers believes its technology and services will help it fend off the
threat.

U.S. federal government spending may be impacted because of the reallocation
of resources to the Middle East, Chambers said.