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Cisco 2nd-Quarter Earnings Up 44% on Tax Benefits, Revenue Growth

Date : 02/14/2013 @ 3:21AM
Source : Dow Jones News
Stock : Cisco Systems, Inc. (MM) (CSCO)
Quote : 23.62  0.36 (1.55%) @ 11:06PM
Cisco Systems, Inc. (MM) share price Chart

Cisco 2nd-Quarter Earnings Up 44% on Tax Benefits, Revenue Growth

Cisco Systems, Inc. (MM) (NASDAQ:CSCO)
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   By Nathalie Tadena 
 

Cisco Systems Inc.'s (CSCO) fiscal second-quarter earnings jumped 44% as tax benefits boosted the network-equipment maker's results and as revenue strengthened.

Core earnings topped the company's expectations.

Cisco has now reported five consecutive quarters of year-over-year earnings growth after the company stumbled in 2011, delivering underwhelming results that triggered a massive restructuring effort to focus on core product areas such as routing and switching gear that shuttle data between computers. Its recent results have been helped by lower operating costs, though operating expenses increased slightly in the latest period.

Cisco, often seen as a bellwether for the technology industry as it sells networking gear to a broad swath of customers, also faces ongoing weakness in Europe and soft demand from public-sector organizations.

For the quarter ended Jan. 26, Cisco posted a profit of $3.14 billion, or 59 cents a share, up from $2.18 billion, or 40 cents a share, a year earlier. The latest period included a 17-cent gain related to a tax settlement with the Internal Revenue Service and related to the reinstatement of a federal research and development tax credit. Excluding stock-based compensation expenses, amortization and other items, per-share earnings rose to 51 cents from 47 cents. Revenue rose 5% to $12.1 billion.

In November, Cisco projected core earnings of 47 cents to 48 cents a share and revenue growth between 3.5% and 5.5%.

Gross margin narrowed to 60.7% from 61.3%.

Revenue from the product segment, Cisco's biggest top-line contributor, improved 3.5%, while revenue from its services segment increased 10%.

Operating expenses were up 4.5%.

Shares were up 1.3% to $21.40 in recent after-hours trading. The stock is up 25% over the past three months, through the close.

Write to Nathalie Tadena at nathalie.tadena@dowjones.com

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