Cisco posts record profit in Q4

Cisco Systems has reported record-high net income of $1.4bn (£766m) for the fourth quarter ended 31 July, a significant leap from...

Cisco Systems has reported record-high net income of $1.4bn (£766m) for the fourth quarter ended 31 July, a significant leap from net income of $982m (£537m) in last year's fourth quarter.

The profit came on net sales of $5.9bn (£3.2bn), up from $4.7bn (£2.5bn) in the year-earlier quarter.

The net income was Cisco's biggest ever, according to US Generally Accepted Accounting Principles and on a pro forma basis, president and chief executive officer John Chambers said.

Cisco also announced two other milestones in its recovery from the telecommunications slump. Chambers' salary of $350,000 per year was reinstated with effect from 1 August, after he asked Cisco in April 2001 to pay him $1 per year until the company recovered. He also has not received a bonus since June 2001.

And in the fourth quarter, Cisco reported its first net increase in headcount excluding acquisitions in many years. The company plans to add 1,000 employees by the end of this calendar year, a majority of them in research and development.

Cisco forecast revenue to remain flat or go up slightly in the first quarter of 2005 from 2004's final quarter. Customers say they are more cautious than they were a month ago, Chambers said.

"Most of the CEOs that I've talked with view the economy as growing at a modest level," Chambers said.

Cisco characterised its results as generally strong across countries and product categories, with the strongest growth in the US and the Asia-Pacific region. In the US, Cisco's biggest market with 48% of its revenue, enterprise and commercial sales grew strongly for the second quarter in a row and sales of service provider equipment had their strongest growth in more than three years.

Cisco got 30% of its sales from Europe, the Middle East and Africa, 11% from the Asia-Pacific region, 7% from Japan and 4% from the Americas excluding the US. Russia was a highlight, with sales growth of 40% year-over-year, and sales in China and India showed strong growth as well.

Switch sales brought 41% of Cisco's revenue in the quarter, with routers accounting for 24%, services 16% and other revenue 3%. Cisco's advanced technologies, which are generally new product categories it has entered over the past few years, accounted for 16% of revenue. They include IP telephony, home networking, optical, security, storage and wireless.

Stephen Lawson writes for IDG News Service

Read more on IT strategy