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Cisco posts strong first-quarter earnings

Cisco Systems' first-quarter revenue and profit soared above results from last year, with the network equipment supplier bringing in $5.1bn (£3bn).

Net income for the quarter was $1.1bn (£658m), up from $618m last year. Revenue exceeded the first-quarter 2003 result of $4.8bn (£2.9bn).

The company's results in the US suggest the economic recovery may be gaining strength, president and chief executive officer John Chambers said.

Growth in US bookings was "solid" for both enterprise and service provider products, but Chambers remains cautious.

"The recovery appears to be slowly gaining momentum but is still fragile in the minds of our customers," Chambers said.

He is looking toward a gradual, industry-by-industry "rolling recovery". Many enterprises are waiting for their own results to improve before spending more, he said.

Cisco expects to report a slight gain in revenue when it announces second-quarter results in February.

Among areas of strength, enterprises are embracing Gigabit Ethernet Lan equipment at a higher rate than Cisco had expected.

Revenue from six "advanced technology" areas that Cisco is trying to build into billion-dollar businesses made up a growing share of sales in the quarter.

Together, those segments - IP telephony, home networking, optical networks, security, storage networks and wireless - made up 14% of total revenue. Routers brought in 25% of reveune while switches brought in 41% and services 16% and other sources at 4%.

In the quarter, 49% of Cisco's bookings came from the US, and Japan accounted for 9%. The Asia-Pacific region had 11% of orders, while Latin America and Canada accounted for 5%. Europe, the Middle East and Africa accounted for just 26%, down from 32% the previous quarter.

Stephen Lawson writes for IDG News Service


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