| Tech Stock News and Analysis |
|
|
| Tuesday, August 08, 2006 |
Cisco Systems Beats Wall Street Estimates With Flat Earnings for Fourth Quarter
Networking gear provider Cisco Systems Inc. exceeded Wall Street estimates Tuesday with fiscal fourth-quarter profit that was almost the same as in the year-ago period, before the company introduced significant accounting changes.
Net income for the three months ended July 29 was $1.544 billion, or 25 cents per share, compared with $1.540 billion, or 24 cents per share, in the fiscal fourth quarter of 2005.
The newest results would have shown an increase of nearly 22 percent in net income, except for $152 million in compensation expenses related to employee stock options and employee stock purchases. Had those accounting changes been in place last year, Cisco would have reported fiscal fourth quarter profit of $1.265 million, or 20 cents per share, in 2005.
Quarterly sales at Cisco, one of the world's largest makers of routers, switches and other devices that connect computers to the Internet, rose to $7.98 billion from $6.6 billion in the same quarter of 2005. The San Jose, Calif.-based company also produces digital subscriber line and cable broadband equipment, Voice over Internet Protocol telephone service products and network management software.
Cisco President and Chief Executive John Chambers called the earnings "awesome." He credited the 20 percent increase in the number of salespeople in developing countries -- particularly Asia -- for delivering a 21 percent gain in quarterly revenue worldwide.
Orders for Cisco gear in China grew 40 percent from the same period in 2005. Orders remained flat in the United Kingdom and increased less than 20 percent in the United States, which constitutes roughly 45 percent of Cisco's business, Chambers noted in a conference call.
"Asia-Pacific continues to remain solid," Chambers said during a conference call, noting that the company's impressive revenue growth would continue throughout 200, "barring some major surprises in these developing countries."
Executives were so bullish that they predicted revenue in 2007 would grow 15 percent to $9.18 billion.
"We believe our vision, strategy and execution are in great shape as we enter 2007," Chambers said.
Executives were also upbeat Tuesday because Cisco has managed to stay above the stock-options "backdating" scandal that has gripped at least 80 companies nationwide, including Cisco rival Juniper Networks Inc. The companies are conducting investigations to determine whether they retroactively pinned the option's exercise price to a low point in the stock's value -- a practice that makes the rewards more lucrative. If companies backdate options without accounting for the move, it can cause profits to be overstated and taxes to be underpaid. It also exposes companies to possible fraud charges.
"Given the recent attention to this issue, Cisco thoroughly reviewed its issuance of stock option grants and can state with confidence that we did not change stock option grant dates to give a lower exercise price," said Chief Financial Officer Dennis Powell. "We are very comfortable with our accounting for stock options and stand behind all of our financial statements as reported."
The $6.9 billion acquisition of Scientific-Atlanta Inc., which was completed in February, contributed $582 million to sales in the most recent quarter. Scientific-Atlanta, the world's second-largest seller of cable television boxes after Motorola Inc., also specializes in broadband services such as digital content distribution systems.
Excluding options and other expenses, San Jose, Calif.-based Cisco earned $1.9 billion, or 30 cents per share, compared with $1.6 billion, or 25 cents per share in the fiscal fourth quarter of 2005. On that basis, which doesn't conform to generally accepted accounting principles, Cisco easily surpassed the mean estimate of 28 cents per share, or $1.76 billion on sales of $7.92 billion, according to a survey of analysts by Thomson Financial.
Cisco earned $5.6 billion, or 89 cents per share, in the 2006 fiscal year on sales of $28.5 billion. Excluding special expenses, Cisco earned $6.9 billion, or $1.10 per share for the year. Wall Street was expecting the company -- whose clients include Silicon Valley startups to government agencies and multinational corporations such as DaimlerChrysler AG -- to earn $6.74 billion, or $1.08 per share, on annual sales of $28.42 billion.
The results were released after financial markets closed. Cisco shares lost 12 cents, less than 1 percent, and finished the regular session at $17.29 on the Nasdaq Stock Market. The stock gained 82 cents in after-hours trading. |
|
|
|
|
| Previous Post |
|
| Archives |
|
| Links |
|
| Powered by |
 |
|
