Cisco reports strong quarter

Tech spending is picking up

Staff WriterMay 13, 2010 

Cisco Systems, the world's largest maker of networking equipment, reported stronger quarterly results, the latest sign that businesses are reviving spending on new technology.

The Silicon Valley company is considered a bellwether for the broader technology sector. Cisco also is an important part of the Triangle's economy, with 4,404 workers at its 12-building campus in Research Triangle Park.

Cisco reported that net sales rose to $10.4 billion, up 27 percent from the same quarter last year. Net income was 42 cents a share, beating Wall Street analysts' expectations.

"It is clear that our game plan for how to handle economic downturns is hitting on all cylinders," CEO John Chambers said in a prepared statement. Chambers' outlook is widely regarded as an important viewpoint on the health of the tech industry and the economy.

The company had been cutting costs and jobs to ride out the recession. But Chambers said this year that the company planned to resume hiring as customers increase spending. In March, Cisco added about 30 employees and contractors in RTP.

Companywide, Cisco added 1,000 new employees last quarter and plans to hire 2,000 to 3,000 moreover the coming quarters.

Cisco controls much of the market for routers, switches and other equipment needed to handle the increasing volume of data and video traffic over the Internet. The company has been buying other companies and introducing products to strengthen its business during the downturn.

Its shares rose 78 cents Wednesday to close at $26.74. The company released its earnings after the close of regular stock market trading.

In late trading, Cisco shares fell slightly, suggesting that investors were looking for even stronger results and projections for the rest of 2010. The stock is up 43 percent in the past year.

"I was impressed with the numbers," Bill Kreher, a St. Louis-based analyst with Edward Jones & Co., told Bloomberg News. "Cisco's investments during the downturn are clearly paying off."

Staff writer John Murawski contributed to this report.

alan.wolf@newsobserver.com or 919-829-4572

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