Cisco enjoys profit hike

Technology investments contribute to $1.7bn profit increase on last year

Technology investments have helped networking equipment giant Cisco to achieve profits in its latest financial year that are $1.7bn up on the previous year.

Profit for the entire financial year was $3.6bn, compared with $1.9bn last year, despite sales remaining flat at $18.9bn.

John Chambers, president of Cisco, said: "We are pleased to report another solid quarter in a challenging market."

He added that the growth in profit is evidence that the company's investments and strategies over the past three years are paying off.

According to Chambers, sales in IP telephony, storage and optical networking technology contributed significantly to a 20 per cent growth in what the firm calls "advanced technologies".

Nick Watson, Cisco's UK and Ireland marketing and commercial director, said the move into these technology areas was a further step to link technology to productivity in business.

Watson claimed this was the key to making sales in a tough market. "For the channel it is a great opportunity to get into new technologies early in the lifecycle, which represents a great margin opportunity," he said.

Clive Hailstone, Cisco general manager at distributor Computer 2000, said Cisco had been successful in areas such as IP telephony, security and wireless, as well as in encouraging VARs to be active in these areas.

"Cisco always looks after its core business but also encourages its resellers to be proactive in new technologies," he said.

"The objectives it sets VARs and distributors, as well as rebates, encourage them to get involved in new technologies."

Quarterly sales were $4.7bn, up by $100m compared with the previous quarter, but down 2.6 per cent from $4.8bn in the same quarter in 2002.

Profit for the fourth quarter of 2003 was $982m, a strong increase on the $772m for the same quarter in 2002 and slightly down on $987m in Q3 of the 2003 financial year.