>NEWS WRAP: Cisco Reports Higher 1Q Sales, Earnings
DOW JONES NEWSWIRES
SAN JOSE (AP)--Cisco Systems Inc. (CSCO) posted higher sales and profits for its fiscal first quarter Wednesday, the strongest indication yet that corporate spending on networking equipment is rebounding after two years of declines.
For the three months ended Oct. 25, Cisco earned $1.09 billion, or 15 cents a share, up from profit of $618 million, or 8 cents a share, for the same period last year.
Sales jumped 5.3%, to $5.1 billion from $4.85 billion.
Excluding one-time items, the San Jose-based company earned $1.18 billion, or 17 cents a share. That compares with a profit of $1.04 billion, or 14 cents a share, a year ago.
On that basis, the results beat Wall Street's expectations. Analysts were expecting the company to post a profit of 15 cents a share on sales of $4.86 billion.
Cisco, the leading maker of routers and switches through which Internet and other network traffic pass, said as late as August that demand for its products remained weak. Unlike other networking companies, it stayed profitable with strict cost controls and market share gains.
"The business and technology strategies we put in place 18 to 36 months ago are showing tangible momentum," said Cisco Chief Executive John Chambers. "I am confident our strategies and strong execution throughout the downturn have positioned us well for future growth."
Earlier this week, research firm IDC reported the information technology and telecom industries had returned to positive growth this year. Worldwide IT spending is expected to show 5% growth, to $916 billion, in 2004. Spending on telecom services is expended to jump 4%, to $1 trillion.
The results were announced after the markets closed. Earlier, shares of Cisco gained 22 cents, closing at $21.80 per share, in Wednesday trading on the Nasdaq Stock Market. They gained another $1.02 in extended trading.
Updated November 5, 2003 4:27 p.m.
Cisco Systems 1Q EPS 15c
DOW JONES NEWSWIRES
SAN JOSE -- Cisco Systems Inc. (CSCO) reported fiscal first-quarter net income rose 76% on higher sales and a strong showing from its core switching and routing businesses.
In a press release Wednesday, the computer networking company said first-quarter net income was $1.09 billion, or 15 cents a share, compared with $618 million, or 8 cents a share, last year.
Excluding costs such as amortization of purchased intangible assets and deferred stock-based compensation, profits rose to $1.18 billion, or 17 cents a share, from $1.04 billion, or 14 cents, in the period last year.
Wall Street expected Cisco to post a profit of 15 cents a share before items, according to Thomson First Call.
Sales for the quarter ended Oct. 25 were $5.1 billion, above the consensus revenue estimate of $4.86 billion and 5.3% higher than year-ago sales of $4.85 billion.
Sequentially, first-quarter sales rose 8.5% from $4.7 billion in the fourth quarter, easily beating the company's August guidance of 2% to 4% sequential growth.
Cisco, which said sales were above expectations in August, posted year-over-year revenue growth in product and service sales.
First-quarter product sales rose 6.2% to $4.26 billion, while service sales increased about 1% to $838 million.
Analysts, who expected Cisco to have a strong first quarter, cited a temporary rebound in information technology spending.
Cisco's shares closed Wednesday at $21.80, up 22 cents, or 1%, on Nasdaq volume of 76 million shares. Average daily volume is 49.5 million shares.
In after-hours trading, the shares rose $1.24, or 5.7%, to $23.04, according to the Island ECN.
Cisco generated $1 billion in cash from operations in the first quarter, down from $1.1 billion a year earlier, and below the $1.5 billion posted in the fourth quarter.
The technology bellwether said days sales outstanding in accounts receivable at the end of the first quarter totaled 25 days, up from 21 days at the end of the same quarter last year and 26 days at the end of the fourth quarter.
The company's balance of cash and liquid investments fell to $19.7 billion from $21.2 billion a year ago and $20.7 billion at the end of the fourth quarter.
Inventory turns totaled 7.3 for the first quarter, compared with 7.0 last year and 6.8 for the fourth quarter.
Cisco Systems Inc. - San Jose
1st Quar Oct. 25:
2003 2002
Sales $5,101,000,000 $4,845,000,000
Net income a 1,086,000,000 b 618,000,000
Avg shrs (diluted) 7,110,000,000 7,327,000,000
Shr earns
Net income a .15 b .08
a. Includes $51 million in amortization of deferred stock-based compensation, $62 million in amortization of purchased intangible assets, an $18 million gain from income taxes, and $2 million from a payroll tax on stock option exercises. Excluding the items, the company earned $1.18 billion, or 17 cents a diluted share.
b. Includes $43 million in amortization of deferred stock-based compensation, $114 million in amortization of purchased intangible assets, a loss of $412 million from publicly traded equity securities and a gain of $149 million from income taxes. Excluding the items, the company earned $1.04 billion, or 14 cents a diluted share.
Company Web site: cisco.com
-Stephen Lee; Dow Jones Newswires; 201-938-5400
Updated November 5, 2003 5:04 p.m.
Cisco CEO Says Sector Recovery Continues
DOW JONES NEWSWIRES
By Tom Becker
Of DOW JONES NEWSWIRES
NEW YORK -- Routing giant Cisco Systems Inc.'s (CSCO) chief executive said the telecommunications equipment sector continues to recover slowly as customers begin to feel better about their own businesses.
"The recovery appears to be slowly gaining momentum but is still fragile in the minds of our customers," CEO John Chambers said on a conference call with investors. "I still look for improvements first in small- and medium-sized businesses and then gradually expanding industry by industry. I'm more optimistic going into this quarter than I was going into the last quarter."
Cisco management projects fiscal second-quarter revenue will increase 1% to 3%. The telecommunications-equipment maker also sees steady gross margin between 67% and 69%.
"Off of the quarter we just had, if we were forecasting flat revenue it would still be good but we're not doing that," the CEO said. "We expect revenue to be up slightly."
Earlier Wednesday, Cisco reported fiscal first-quarter net income of $1.09 billion, or 15 cents a share, on revenue of $5.1 billion. The San Jose, Calif., company had net income of $618 million, or 8 cents a share, on revenue of $4.84 billion in the same quarter last year. Cisco had net income of $982 million, or 14 cents a share, on revenue of $4.7 billion in its fiscal fourth quarter.
Wall Street had expected Cisco to post net income of 15 cents a share on revenue of $4.85 billion, according to the average estimate of analysts polled by Thomson First Call. Cisco management itself had forecasted sequential growth of 2% to 4%.
Much of Cisco's revenue growth was driven by increased demand for its high-end routers, management said on the call. Sales of the high-end routers were up 10% sequentially off what was a very solid fiscal fourth quarter, CEO Chambers said.
Cisco also saw growth in its switching business, which accounted for 41% of overall revenue. The most growth was found in Cisco's Catalyst 6000, 4500, and 3550 switches, all of which grew by at least 10% sequentially, Chambers said.
Sales to service providers increased 10% sequentially. Chambers said he is pleased with that trend but is also "a little concerned our peers have not seen this improvement."
Cisco saw particular strength in its U.S. and Asia Pacific regions. Sales to U.S. service providers were up 10% sequentially, for example. Cisco's performance is often tied to just how much the telecommunications service providers are willing to spend.
Overall, 49% of Cisco's revenue was generated by sales in the U.S., compared with 50% in last year's quarter. Sales in Europe, the Middle East, and Africa accounted for 26% of revenue, compared with 28% in the same quarter last year. Japan sales accounted for 9% of revenue, compared with 7% in last year's first quarter. Sales in Canada and Latin America were 5% of revenue compared with 4% in the same quarter last year. Revenue generated in Asia Pacific was flat with last year's figures but up sequentially.
Book-to-bill ratio came in at just under one, down slightly from the previous quarter. Book-to-bill measures how many orders turn into actual sales. Gross margin was 68.7%, down from 69.9% last quarter and 69.3% in last year's fiscal first quarter.
Dennis Powell, Cisco's chief financial officer, said Cisco's recent Linksys acquisition took 1% off of margins while contributing $100 million to revenue.
Cisco repurchased 102 million shares during the quarter at an average price of $19.55 a share - for a total purchase price of $2 billion. The company has repurchased $9.8 billion shares under the program and has obtained board approval to repurchase an additional $10.2 billion.
Cash flow from operations was $1 billion. Chambers projects monthly cash flow from operations to come in between $300 million and $400 million, at current revenue levels, in the fiscal second quarter.
-By Tom Becker, Dow Jones Newswires; 201-938-2020
Updated November 5, 2003 6:09 p.m.< |
