Cisco profits jump 18% thanks to datacentre strategy

Cisco reports an 18% rise in profits, hitting $2.1bn for the first quarter of its fiscal year 2013, on the back of its integrated datacentre systems

Cisco has reported an 18% year-on-year rise in profits, hitting $2.1bn for the first quarter of its fiscal year 2013.

Cisco's sales for the quarter came in at $11.9bn – equating to a more modest growth of 5.5% compared with 2011 – but the markets responded favourably, with shares jumping by almost 7%.

Cisco CEO John Chambers claimed the company’s ongoing strategy, focusing on datacentre products to enable new technology trends, continued to ensure growth at a time when the company faces greater competition than ever in its traditional networking business.

Cisco's datacentre division grew revenues by 61% in the quarter to $417m. Switching remained its most profitable area – even with a 2% drop from the same quarter the previous year – bringing in over $3.6bn.

"We delivered record results this quarter, demonstrating our vision and strategy are working," Chambers said.

Revenues for collaboration products dropped 8% to just over $1bn, but service provider video products bolstered the numbers, rising 30% over the three-month period to $1.15bn.

Chambers celebrated what he believed to be Cisco’s successes in providing technology for firms to embrace cloud and mobility. But his sights were set on the next big trend, the internet of things – machine-to-machine communications connecting more products to one another and creating smart devices, from reactive traffic lights to automated cookers.

“Cisco has the unique ability to turn information that will flow across networks into new capabilities and richer experiences," Chambers said.

“The internet of everything will create unprecedented possibilities for businesses, individuals and countries, and Cisco is poised to lead and fully maximise the opportunities of this evolution."

However, the CEO remained nervous of the conditions in the European economy with sales in the region remaining flat, accounting for $2.84bn. The environment in the US seemed to be on the mend though, with a 6.6% rise in sales to reach just over $7bn.

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