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Cisco beats 1Q estimate
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November 9, 1999: 8:16 p.m. ET
Stronger sales to Internet service providers send revenue soaring
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NEW YORK (CNNfn) - Cisco Systems Inc. Tuesday reported a 41-percent rise in its fiscal first-quarter earnings, slightly ahead of Wall Street estimates, amid stronger sales to Internet service providers.
Before one-time charges of $381 million, mostly related to acquisitions, Cisco, the world's leading supplier of data-networking equipment, posted an operating profit of $837 million, or 24 cents per share in the quarter ended Oct. 30. Analysts polled by First Call had expected Cisco (CSCO) to earn 23 cents per share in the quarter.
Including charges, Cisco's net income was $438 million, or 13 cents per share.
Revenue rose 49.3 percent to $3.9 billion, although executives at the San Jose, Calif., firm noted that sales were weaker during the first half of the quarter, due in part to Y2K concerns.
However, that trend did not continue in the second half, and the company does not see any major disruptions in its business because of Y2K issues, John Chamber, Cisco's chairman and chief executive, told analysts and investors during a conference call after the close of trading Tuesday evening.
"We do not plan to make any change to our business strategy based on Y2K uncertainty," Chambers said. "We think it will be a one-quarter phenomenon.
Cisco shares were up 3-5/8 in extended hours trading, a rise of 4.8 percent after closing down 1-1/16 in regular trading on the Nasdaq. The stock's decline came after Cisco announced that it would acquire Aironet Wireless Communictions (AIRO), a maker of wireless networking products, for $799 million in stock.
With its most recent earnings results, Cisco blew away its performance during last year's fiscal first quarter, when it posted a profit of $561 million, or 17 cents per share, on $2.6 billion in revenue.
The company also closed five acquisitions during the quarter and forged a major technology alliance with IBM.
Under its contract with IBM, Big Blue agreed to supply Cisco with its network technology over the next five years. The two companies -- which also are working together to develop networking products that permit simultaneous voice, data and video transfer -- have valued the deal at roughly $2 billion.
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