Capital spending boosts Cisco third-quarter profits

By Matthew Fordahl
Associated Press

SAN JOSE, Calif. — Cisco Systems Inc.'s fiscal third quarter profits jumped nearly 26 percent as governments and businesses continued to ratchet up their capital spending on equipment to build and bolster computer networks.

Cisco, the world's largest network equipment maker, yesterday reported strong growth in all of its major product categories. The company also said it added 200 jobs in the third quarter and plans to add another 1,000 positions by the end of the calendar year.

For the three months ended May 1, the company earned $1.2 billion, or 17 cents per share, compared with $987 million, or 14 cents per share, in the same period last year. Sales jumped nearly 22 percent, to $5.6 billion in the third quarter from $4.62 billion last year.

Excluding special items, the company earned $1.36 billion or 19 cents per share, compared with $1.08 billion or 15 cents a share in the same period last year.

Analysts had expected the company to post a profit of 18 cents per share on sales of $5.5 billion, according to a survey by Thomson First Call.

In February, it predicted sales would rise between 1 percent and 3 percent in the third quarter. Instead, they rose 4.1 percent.

The company predicted fourth-quarter revenue would grow 3 percent to 5 percent over the third quarter. That would place year-over-year growth at 23 percent to 25 percent, said Dennis Powell, Cisco's chief financial officer.

But John Chambers, Cisco's chief executive, warned that though companies are loosening their purse strings and making investments in network improvements, there's a risk that global instability, rising interest rates and the volatile stock market could lead to more cautious spending.