Cisco Systems Inc. Earnings: Beats Expectations

S&P 500 (NYSE:SPY) component Cisco Systems Inc. (NASDAQ:CSCO) reported net income above Wall Street’s expectations for the second quarter. Cisco Systems is a multinational corporation engaged in the design, manufacturing, and sales of Internet Protocol-based consumer electronics, networking, and other services related to communications and information technology.

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Cisco Systems Earnings Cheat Sheet for the Second Quarter

Results: Net income for Cisco Systems Inc. rose to $2.2 billion (40 cents per share) vs. $1.52 billion (27 cents per share) in the same quarter a year earlier. This marks a rise of 44.6% from the year earlier quarter.

Revenue: Rose 10.8% to $11.53 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Cisco Systems Inc. reported adjusted net income of 47 cents per share. By that measure, the company beat the mean estimate of 38 cents per share. It beat the average revenue estimate of $11.23 billion.

Quoting Management: “We delivered strong performance this quarter with record revenue and earnings per share,” said John Chambers, Cisco chairman and CEO. “We are executing well on our three-year plan to drive earnings faster than revenue. Our operational focus continues to yield positive results — we hit our billion dollar expense reduction a quarter early — and our ongoing innovation enables our customers to solve their critical business needs. You will continue to see a focused and aggressive Cisco that is helping our customers use intelligent networks to transform their businesses.”

Key Stats:

Last quarter’s profit increase breaks a streak of four consecutive quarters of year-over-year profit drops. In the first quarter, net income fell 7.9% from the year earlier, while the figure fell 36.3% in the fourth quarter of the last fiscal year, 17.6% in the third quarter of the last fiscal year and 17.9% in the second quarter of the last fiscal year.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 4 cents in the first quarter, by 3 cents in the fourth quarter of the last fiscal year, and by 5 cents in the third quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 4.7% to $11.26 billion in the first quarter. The figure rose 3.3% in the fourth quarter of the last fiscal year from the year earlier and climbed 4.8% in the third quarter of the last fiscal year from the year-ago quarter.

Margins rose in the first quarter after falling the quarter before. Gross margin rose 1.1 percentage points to 61.3% from the quarter earlier quarter. In the fourth quarter of the last fiscal year, the figure rose 1.6 percentage points to 61.2% from the year earlier quarter.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the third quarter is 40 cents per share, up from 39 cents ninety days ago. The average estimate for the fiscal year is $1.58 per share, a rise from $1.50 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com