Cisco back on acquisition trail after record quarter


Cisco back on acquisition trail after record quarter

Warwick Ashford

Cisco Systems has reported record revenues of $11.5bn for the second fiscal quarter that ended 28 January 2012, up 11% on the year-ago quarter, and profits of $2.6bn  up 27%.

Both exceeded analysts’ expectations, according to a Bloomberg survey.

Cisco predicts that revenues will grow 5% to 7% year-on-year in the current quarter, pushing the share price up by as much as 3% in after-hours trade in New York.

The strong financial results follow an intensive restructuring and cost-cutting programme at Cisco, which included cutting more than 6,000 job in 2011.

"We are executing well on our three-year plan to drive earnings faster than revenue," said Cisco chief executive John Chambers.

"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,” he said.

Chambers said Cisco had curtailed its M&A activity in the past year, but planned to be more active with acquisitions in the quarters and the years to come, according to the Financial Times.

Future deals, he said, will focus around the five key areas: network switching and routing equipment, collaboration, data centres and the cloud, other video services, and architectures for business transformation.

In the just-ended quarter, Cisco completed its acquisition of privately-held BNI Video, which supplies service providers with two major video products that offer video back-office and content delivery network (CDN) analytic capabilities.

At the Oracle Open World conference in October 2011, Chambers said video will be the future for all forms of communication.

"Video will be the platform for all forms of communication in IT as we go forward." Cisco no longer makes devices that are not video capable,” he said.

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