Cisco surpasses Wall Street expectations

Strong demand from internet service providers has boosted Cisco's first-quarter results, which helped the vendor beat Wall Street profit predictions.

The networking vendor reported net income before one-off charges of $41 million for the acquisition of American Internet, up 34 per cent to $559 million for the period ended 24 October, from $416 million in the first quarter of last year, one cent higher than analysts had forecast. Sales for the quarter also rose 38 per cent from #1.87 billion to $2.59 billion.

US analysts said the main contributor to the first-quarter growth was increased penetration of the service provider market, specifically ISPs and telcos, while sales of the Access range and the carrier class switches have risen.

Cisco was also helped by falling component prices, and US analysts questioned the vendor's resilience in a recession, since its business will continue to focus on corporate and service provider customers, which may cut back capital spending as the economy slows.

John Chambers, president and chief executive of Cisco, said the internet was becoming more widely accepted as a key economic driver.

However, Cisco shares have suffered in recent months - falling more than 30 per cent from an all-time high of $70.25 at the end of August, when Nasdaq experienced alarm over technology stocks.

Meanwhile, Cisco announced the fourth phase of its five-pronged strategy to carry voice over traditional data networks.

The strategy has been aimed at enabling users to transmit voice, data and video over IP, frame relay and ATM networks while the latest launch will extend the scheme to campus and branch office environments. The scheme will be based on the corporate PBX software developed by Selsius, which Cisco acquired less than a month ago.