CHICAGO – Cisco Systems Inc. (CSCO) said Tuesday quarterly earnings rose as hot technologies such as digital phone calling offset slower growth products like switches used in traditional phone networks.
Cisco (search), the largest maker of gear for directing Internet traffic, said net sales in what is traditionally a weaker fiscal third quarter rose 10 percent to $6.2 billion from a year earlier, slightly higher than analysts' average forecast.
RBC Capital Markets analyst Mark Sue said growth in more complex products helped boost sales, but not profitability. "At the same time, it did not impact gross margins in the quarter," he said.
Earnings before items were 23 cents a share, Cisco said, beating the average estimate by a penny, according to Reuters Estimates.
"The numbers look pretty good," said JMP Securities analyst Samuel Wilson. "Overall it looks like a good quarter."
Cisco Chief Executive John Chambers said the company was having some success expanding beyond its traditional customer base of corporations to phone companies and other service providers that are upgrading their networks.
Cisco said net profit in its fiscal third quarter rose to $1.4 billion, or 21 cents a share, compared with $1.2 billion, or 17 cents a share, in the year-ago period.
During the third quarter, Cisco bought back 114 million shares of its common stock for about $2.0 billion.
Inventory turns were 6.5 in the third quarter, even with the year-ago period.
Shares in Cisco rose to $18.37 on the Inet electronic brokerage system from a close of $18.21 on the Nasdaq.