Cisco Systems profits jump 33%
By Jeffry Bartash, CBS MarketWatch
Last Update: 5:26 PM ET Feb 2, 1999 Earnings Surprises
SAN JOSE, Calif. (CBS.MW) -- Cisco Systems said Tuesday second-quarter profit grew 33 percent to top most Wall Street estimates, propelled by equipment sales to Internet access providers.
CSCO
NASD
Last Chg.
112 25/64 -2 39/64
% Chg. Vol.
-2.27% 31,730,100
Day Lo. Day Hi.
111 1/4 116 3/4
Open Prev.
116 3/8 115
As of
Feb 02/99 6:01 pm ET
Last Trade
Feb 02/99 4:01 pm ET
15 MIN. DELAY
Excluding charges, the networker said profits for the quarter ended Jan. 23 climbed to $606 million, or 36 cents a share, vs. $457.3 million, or 29 cents, the same period a year earlier. Analysts expected Cisco to earn 35 cents a share, according to First Call.
Net income totaled $288 million, or 17 cents a share, including one-time items. Cisco acquired Summa Four, Clarity Wireless, Selsius System and PipeLinks for a combined $537 million and took a charge of $349 million, or 19 cents, related to a write-off of certain research and development expenses.
Revenue increased 40 percent to $2.83 billion from $2.02 billion. The company reported results after the stock market closed. See press release
Cisco's stock (CSCO), which dipped 2 39/64 to 112 25/64 ahead of the news, is still near a 52-week high.
Big battle brewing
Cisco is the biggest manufacturer of data networking products such as routers and switches, which tell information where to go. Its sales and profits have been growing rapidly in the past few years amid surging demand for such equipment.
Today on CBS MarketWatch
Street dumps tech stocks
Cisco Systems profits jump 33%
Fed has luxury of doing nothing
Net, hardware stocks drag techs lower
Amdocs makes telecom splash
More top stories...
CBS MarketWatch Columns
Updated:
2/2/99 5:29:12 PM ET
While Cisco used to garner much of its business from corporate clients seeking to link their local, national or even global computer systems, the company is increasingly selling gear to telecom carriers that are building networks based on the so-called Internet protocol.
Digital protocols are widely expected to replace century-old circuit-based technology as the primary method of sending information -- voice, data, video. Versatile IP networks can carry far more traffic at a much lower cost.
As phone, cable and Internet providers move to the IP standard, Cisco is starting to engage in head-on competition with traditional phone-equipment suppliers, such as Lucent Technologies, to tap into previous untouched markets. Indeed, Lucent recently announced that it would acquire data networker Ascend Communications (ASND) in an effort to outflank Cisco.
Cisco also has to contend with other rivals such as data networker 3Com (COMS) and phone-equipment maker Nortel (NT), which are also transforming themselves into all-encompassing telecom suppliers. Despite such obstacles, Cisco generally wins high praise from Wall Street for its products, market skills and aggressiveness and is expected to emerge as one of the big winners in the budding new world of Internet-based networks.
|
