Cisco Beats All Odds – Revenue Exceeds $10Billion Mark

Quite opposite the wall street speculations, the fourth quarter filings of Cisco Systems today, brightened up many investor’s day as reports show a huge 10 percent hike in revenue, in the fourth quarter, helping it cross the$ 10 billion mark for the first time ever in the company’s history, despite the slump in the economy.

While sales were expected to hit an all time low in the company due to slackening demand in the economy, it was quite a surprise for the investors to find that Cisco, which is the largest manufacturer of networking equipment, had followed the upward trend showing a whopping 44 percent increase in net income.

Its net income rose from $2 billion last year to $10.4 billion this year, giving a 33 cent rise per share. If one time articles were to be excluded, the rise was 40 cents per share.

“It’s still a tough environment out there, but Cisco has delivered very strong results, with revenue exceeding $10 billion for the first time in the company’s history,” said Mark Sue, an analyst at RBC Capital Markets.

According to Sue the secret lied in the diverse portfolio of products, the company was maintaining, coupled with balanced sales domestically as well as overseas.

“It was a very solid quarter for Cisco, particularly given the challenges we are all seeing.” Said, John T. Chambers, the chief executive of the company. “We all see the same mixed signals in the market, from both a U.S. perspective and other parts of the world, in terms of economic momentum, stock market behaviour, energy costs and confidence challenges.” He added.

Cisco that has a long term growth target of 12 to 17 percent for the company saw its shares rising after the report was released. There was a 7 percent rise in share prices after the release of the report. The shares rose 66 cents, to close at $22.65. A three percent hike from the previous day.

Chambers considers the market problems as short term ups and downs, although, he does expect them to last a few more quarters. He also said that the company’s investments would continue, in order to fully utilise the weak business environment in order to expand it’s market share.

Maintaining a conservative approach to forecasting the future, Mr. Chambers decided to forecast sales only for the first half of the coming year, pinning them at an 8 per cent growth in the first quarter and 8.5 in the second.

Taking an account of the full year earnings of Cisco this year, the net income was up by a billion at $8.1 billion, as compared to the $7.3 billion the previous year. The revenue this year was $39.5 billion, as compared to the $34.9billion, last year.

Not only that, the overall product sales of the company rose 8.8 percent to $8.64 billion, while the sales of services rose 16 percent to $1.72 billion. Cisco is the leading seller of switches as well as routers for telecommunications companies.