SAN FRANCISCO – Cisco Systems Inc.'s (CSCO) fiscal fourth-quarter profit jumped 25 percent as the network equipment maker continued to see strong sales of the routers and switches that direct traffic over the Internet and other technologies tied to a boom in multimedia online content. Shares jumped more than 5 percent on a boosted financial forecast.
Net income for the period ended July 28 was $1.93 billion, or 31 cents per share, compared with $1.54 billion, or 25 cents per share, during the same quarter a year ago.
Excluding one-time charges, Cisco earned 36 cents per share, a penny above the estimate of analysts surveyed by Thomson Financial.
Revenue for the period was $9.43 billion, an 18 percent increase from the $7.98 billion in sales Cisco rung up last year. The revenue also beat Wall Street's estimate, which was for $9.29 billion in sales.
On a conference call with analysts, Cisco Chief Executive John Chambers said the company is boosting its revenue forecast to 13 percent to 16 percent for 2008. For the current quarter, the company expects revenue of $9.45 billion to $9.55 billion, above the average analyst's estimate of $9.39 billion.
Chambers also announced that Chief Financial Officer Dennis Powell will retire at the end of the second quarter of the current fiscal year. His replacement will be Frank Calderoni, currently a Cisco senior vice president.
Powell said in an interview with The Associated Press that he's "never been more optimistic" about Cisco's prospects and is leaving at a time when the company's investments in lucrative emerging markets are beginning to pay off.
"We're at the right time with the right products," he said. "And the economy, from my perspective, on a global basis have never been better. And that bodes well for Cisco."
San Jose-based Cisco is profiting from widespread network upgrades as Internet service providers and other companies boost capacity to handle increasingly bandwidth-heavy downloads, particularly video.
The company's higher guidance signals that it expects robust spending on such network improvements to continue well into the future, said Troy Jensen, senior research analyst with investment bank Piper Jaffray & Co.
"That implies they're pretty serious about the upgrade cycle," Jensen said. "There was really just nothing wrong with the quarter."
Some analysts have expressed concerns about whether Cisco can keep up its rapid growth. Investors have been particularly worried in the past couple of quarters about a slowdown in one of Cisco's key businesses — orders from U.S. businesses — whose growth has plunged to mid-single digit rates. That segment rebounded in the fourth quarter, growing about 12 percent over last year.
Cisco is also growing by moving beyond its roots as purely a networking gear maker. During the fourth quarter, the company completed its $3.2 billion acquisition of online meeting company WebEx Communications and the $830 million takeover of IronPort Systems Inc., a maker of anti-spam and antivirus security products.
Shares of Cisco were up $1.72, or nearly 6 percent, to $31.41 in after-hours trading. Before the earnings were released, Cisco's stock price rose 19 cents to close at $29.69.