Cisco beats estimates

May 16, 2013 8:43 am

ciscoCisco Systems Inc., the largest computer networking manufacturer, reported 14.5% profit raise from last year. The boost in quarterly sales led to a similar boost in earnings per share. The world leading computer gear maker struggled in recent years because of low demand and severe competition.Thousand of jobs had to be cut in a attempt to diminish costs.In 2011 Cisco showed intentions to cut around 6500 jobs globally, as a solution to cost management.

To turn the odds around Cisco invested more into technologies such as online video, high speed internet and cloud computing. That move payed off as Cisco recorder significant raise in sales from its new investments. According to company’s CEO John Chambers, Cisco is operating at a very high level in a slow steady environment.

Cisco is taking bravely the steps of diversification in segments other than just computer networking gear as the market is pushing the company to make changes. As the networking gear sales dropped 2% compared to an year ago. What’s keeping Cisco growing is the new, but still directly related to their main focus, line of products and services. Tax relief benefits implemented by R&D Tax credit act on 2nd of January 2013 is the second reason for company’s strong position so far this year.

The third Q net sales show $12.2 billion (increase of 5% over year) and net income of $2.7 billion. Around 37 analysts expected Cisco to earn $0.49 per share for the third quarter. The company beat that estimate earning $0.51 per share for same period. In March Cisco raised its dividend with $0.03 to $0.17 per share.Company’s gross margin of 63% proves to be impressive according analysts

Cisco is pursuing a strategy of aggressive acquisition in order to grow. Some privately held companies in Czech Republic and Austria have recently joined the team.

The new products and tax relief got Cisco ahead in third quarter. Company stated intentions of continuing the diversification of products and services and numbers looking strongly supportive of those intentions.

Juniper Networks, Inc. one of main competitors of Cisco in the router industry showed high first quarter profit but gave a lower estimates for the second one, obviously struggling to reach high sale levels, and not reaching convincingly enough to the customer.

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