Financial results suggest Cisco has turned a corner

Cisco's Q2 results are strongest in five years suggesting the worst of the restructuring may now be behind it

Cisco may just have turned a very sharp corner as it reports a 68% rise in profits year-on-year in the three months to the end of January,

The communication titan has undergone significant restructuring as it attempts to shift away from its bread and butter telecoms offerings to emerging technologies.

It was Cisco’s switching business that was the real cash cow in the quarter, accounting for 39% of total hardware revenue, followed by the router business, which accounted for 21.2%.

Overall revenue rose by 7% to $11.94bn and net profit rose to $2.4bn. Adjusted profit came in at 53 cents per share, 2 cents higher than analysts had expected. Cisco’s share price grew by more than 5% in after-hours trading following the results.

“I am not sure those outside Cisco appreciate the magnitude of the changes we have implemented over the last year largely because of our ability to continue to deliver to long-term value to our customers and to our shareholders despite the challenges in the market,” CEO John Chambers said in a conference call with analysts.

“Most companies wait to change until they have to. When it’s obvious and it’s often game over and those companies get left behind. In the last year, we were willing to disrupt our leadership position for example in switching and routing by introducing entirely new platforms. We knew, we'd see a short-term impact but told the market how we would grow.”

“Once again, we did what we said we would do,” Chambers added.

But it wasn’t all peaches and cream. Sales in China fell sharply as the Eastern superpower continues to scrutinise foreign technology and revenue from video-service technology also fell by 19%.

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