Cisco Leaps 44% As Business Buys Tech
0Overall Score

SAN FRANCISCO – Networking giant Cisco has reported a massive 44 percent rise in net profit for its fiscal second quarter, ended January 26, leading to speculation that the climate for technology spending by business is improving.Cisco reported net income of $3.1 billion, up from $2.2 billion a year earlier.

Revenue was up 5 percent at $12.1 billion. The group’s bottom line was boosted by $926 million as a result of a tax settlement and reinstatement of a R&D tax credit.

CEO John Chambers told analysts that he sensed “cautious optimism” among technology buyers. He later said that most of Cisco’s US customers are seeing “slow improvement” in spending.

However business remained weak in Europe, where sales and orders fell.Analysts noted that some of the new areas Cisco has been emphasising for future growth showed the best rises.

For instance, its business selling software and equipment for video grew 20 percent to $1.2 billion, thanks partly to its $5 billion acquisition of NDS Group. Cisco’s datacentre business grew 65 percent to $548 million.

But sales of collaboration technology, including Cisco’s high-end videoconferencing units, fell 11 percent to $945 million.- Two other Silicon Valley companies yesterday reported better days in their latest quarters.

Storage group NetApp reported profit up 43pc at $158 million; while graphic chipmaker Nvidia scored a rise in net profit from $116 million to $174 million, reflecting a move into the tablet arena.