Cisco's Chambers Sees Economy on the Mend

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Cisco Systems' results for its fiscal quarter ended last month indicate the world economy is entering a second phase of recovery, Chairman and CEO John Chambers said Wednesday.

Cisco posted revenue of US$9.8 billion in the second quarter of its 2010 fiscal year, ended Jan. 23, an 8 percent increase from a year earlier. Its net income was $1.9 billion, or $0.32 per share, up 23 percent from the quarter a year earlier.

"Our outstanding Q2 results exceeded our expectations and we believe they provide a clear indication that we are entering the second phase of the economic recovery. During the quarter we saw dramatic across the board acceleration and sequential improvement in our business in almost all areas," Chambers said in the company's earnings press release.

Not counting certain one-time items, the dominant networking vendor earned $0.40 per share, exceeding analysts' consensus expectation of $0.35 per share, according to a survey by Thomson Reuters. The analysts had forecast revenue of $9.4 billion, a number Cisco also exceeded.

Cisco marked its 25th anniversary during the quarter, even as it moved farther beyond its roots in switching and routing with wireless, consumer electronics and server products. In November, the company dove deeper into virtualized data centers as it formed a coalition in which EMC will provide storage components and VMware will contribute its software to work with Cisco's Unified Computing System server platforms. Also during the quarter, it closed the earlier acquisitions of mobile infrastructure vendor Starent, for about US$2.9 billion, and of software-as-a-service company ScanSafe.

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