Cisco 4Q profit up, margins fall

08:05, August 12, 2010      

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The world's largest computer networking equipment maker Cisco Systems Inc. reported on Wednesday that its net income in the fourth-quarter increased by 79 percent although its margins fell.

For the quarter ended on July 31, Cisco posted a net income of 1.94 billion U.S. dollars, up 79 percent from the 1.08 billion in the same quarter last year, the San Jose, California-based company said in a press release.

Meanwhile, its net sales climbed to 10.84 billion dollars from 8.5 billion in 2009, an increase of 27 percent. In May, Cisco projected its fourth-quarter net sales would increase by 25 to 28 percent.

Although strong earnings were reported, the numbers were still lower than Wall Street expectations. According to Thomson Reuters, the latest estimates were 10.88 billion on net sales.

Besides, the company's gross margins declined for the second consecutive quarter to 62.7 percent from 64 percent.

"We are very pleased with our results for the fourth quarter, achieving a total revenue increase of approximately 27 percent year over year at the upper end of our guidance, alongside the exceptional quality of our earnings," said Cisco Chief Financial Officer Frank Calderoni in a statement.

Analysts said Cisco's sales could be affected by the sluggish corporate spending as it heavily depends on large corporations and government agencies.



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