Cisco’s Not Singing the Blues

Cisco Systems Inc. reported a second-quarter pro-forma profit that bested analysts’ expectations by a full four cents. While the networking giant’s revenues fell 29 percent, top Cisco officials say the company is now positioned to achieve its long-term goals.

San Jose, Calif.-based Cisco said its second-quarter earnings before one-time charges were down to $664 million or $0.09 per share from $1.3 billion or $0.18 a share in the year-ago period. Thomson Financial/First Call reported that analysts expected Cisco to report pro-forma earnings of $0.05 a share.

In this fiscal year’s first quarter, Cisco pro forma net income was $332 million or $0.04 per share, the company also said.

Actual net income for the second quarter of fiscal 2002 was $660 million or $0.09 per share, compared with actual net loss of $268 million or $0.04 per share for the first quarter of fiscal 2002, and actual net income of $874 million or $0.12 per share for the same quarter last year, Cisco also said.

Second-quarter revenues fell 29 percent to $4.8 billion, an increase of 8% from the $4.4 billion in sales recorded in this year’s first quarter, but off 29% from the $6.7 billion in net sales reported in the year-ago second quarter.

John Chambers, Cisco president and chief executive officer (CEO), said in a statement that the second quarter was a “very solid one” for the networker. “I was especially pleased with our profitable market share gains and strong operational performance in a very challenging market, as well as our continued improvement to an already strong balance sheet.”

“We’ve managed our business and market opportunity to the breakaway strategy and six-point-plan we announced last year,” Chambers also said. “In almost every area of our business we’ve seen positive evidence of our strategy working, from market share gains and cash generation to inventory turns and gross margin improvements. While there is always room for improvement, I don’t think Cisco has ever been better positioned to achieve our long-term goals.”

Earlier today, Cisco said it prematurely and inadvertently sent word to its employees that it would exceed its goals for the second quarter. The early announcement, made 24 hours before its scheduled quarterly financial report, told employees that booked orders for the quarter ending Jan. 26 were $3.9 million, beating the company goal of $3.75 million.

The memo did not include specific information about revenues or earnings for the quarter but Larry Carter, Cisco’s chief financial officer, confirmed this morning that the company would, indeed, exceed its internal targets for the quarter ending Jan. 26.

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