Strong U.S. sales help Cisco beat estimates

Wed Aug 12, 2015 6:40pm EDT
 
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By Arathy S Nair and Anya George Tharakan

(Reuters) - Network equipment maker Cisco Systems Inc (CSCO.O: Quote) reported higher-than-expected quarterly revenue and profit as strong demand for its products in the United States more than offset weakness elsewhere.

Shares of Cisco, considered a bellwether for the performance of the broader network gear industry, rose nearly 4 percent in extended trading on Wednesday.

The company is the market leader in selling network equipment to businesses, controlling about half of the $38 billion global market and overshadowing rivals Hewlett-Packard Co (HPQ.N: Quote) and China's Huawei Technologies Co Ltd HWT.UL, according to market research firm Gartner.

Cisco's latest results also underscore an ongoing recovery in sales of the company's switches and routers, which were hit by a slowdown in spending by telecom carriers, its traditional customers, in the second half of 2014.

Needham & Co analyst Alex Henderson said the 7 percent rise in revenue in the Americas was a "laudable performance." The region accounted for 61 percent of total sales in the fourth quarter.

"I think for the entire market - and Cisco is a microcosm of it - the international markets are the key issue."

Cisco said revenue from other geographies declined marginally.

The company has also been investing in new products and services such as data analytics software, security and cloud-management tools.   Continued...

 
The Cisco Systems logo is seen as part of a display at the Microsoft Ignite technology conference in Chicago, Illinois, May 4, 2015. REUTERS/Jim Young