Cisco Results Top Expectations

Cisco Systems Inc. on Wednesday reported better-than-expected revenue and earnings as the networking-equipment maker raised its quarterly dividend by 24% and increased its stock-buyback plan by $15 billion.

Shares of the Cisco, which have fallen 19% over the past three months, rose 9.2% to $24.58 in after-hours trading as the company also provided upbeat revenue guidance for the current quarter.

Cisco's core business of making the switches and routers, which are used to help connect computers to each other and the Internet, has been under pressure from growing competition.

In the company's January quarter, the second of its fiscal year, Cisco said sales fell 4% to $3.48 billion in the switching business but rose 5% to $1.85 billion in the routing business.

Cisco has been experiencing faster growth in newer kinds of products, including conferencing hardware and software. That collaboration business—Cisco's third-largest—saw revenue grow 3% to $1.02 billion in the second quarter.

Meanwhile, revenue from the company's data center business, which includes sales of server systems, fell 3% to $822 million. The slowdown in Cisco's server business may increase concerns about spending by corporate customers.

Cisco, because of its position in the network-equipment market, frequently experiences shifts in business conditions ahead of some of its peers.

For its current third quarter, Cisco projected per-share earnings—excluding certain costs—between 54 cents and 56 cents as well as revenue growing between 1% and 4%. Analysts, on average, were expecting earnings on a similar basis of 55 cents a share and revenue to slide 1%, according to Thomson Reuters.

Over all, for the three months ended Jan. 23, Cisco reported second-quarter earnings of $3.15 billion, or 62 cents a share, up from $2.4 billion, or 46 cents a share. Excluding certain items, such as stock-based compensation, the company's per-share earnings rose to 57 cents from 53 cents a year ago.

Total revenue slipped slightly to $11.93 billion from $11.94 billion a year ago. Excluding the video business that Cisco separated in November, the company's revenue rose 2% to $11.8 billion.

Analysts surveyed by Thomson Reuters were expecting earnings of 54 cents a share on revenue of $11.75 billion.

Write to George Stahl at [e-mail]

(END) Dow Jones Newswires

February 10, 2016 16:55 ET (21:55 GMT)

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