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Cisco reports runaway profits

The Cisco Systems profit engine is still firing on all cylinders as the company reports profits that soared 86 percent over year-ago figures.

The Cisco Systems (CSCO) profit engine is still firing on all cylinders.

A bellweather company, Cisco reported a 30 Cisco at a glance percent jump in first-quarter revenues and profits that soared 86 percent over year-ago figures.

That performance comes as the company released several new products during the quarter that contributed to its bottom line, including volume shipments of two long-anticipated remote access devices that shore up a weak spot in Cisco's portfolio.

Performance was stronger than what chief executive John Chambers initially had forecast at the end of the previous quarter, when he warned that the first quarter could be "more tricky than normal" due to shorter product lead cycles. At the close of the first quarter the CEO was optimistic about the results and the future of the company, which remains the largest firm in the data networking market.

The networking giant reported revenues of $1.87 billion for the quarter ending October 25, compared with revenues of $1.43 billion a year ago.

Net profits climbed to $336.5 million, or 48 cents a share, for the quarter, up from earnings of $180.9 million, or 26 cents, a year ago.

Excluding a one-time write-off related to the acquisition of

Cisco CEO John Chambers on the networking market
Dagaz Technologies during the first quarter, the company would have posted profits of $416 million, or 59 cents a share. Cisco beat analysts' estimates by a cent, according to First Call.

Cisco's stock closed down 1-5/16 points, to 83-7/16, on Wall Street today in heavy trading, compared to yesterday. More than 13 million shares changed hands in anticipation of the company's announcement.

"We continue to maintain our leadership in almost all product areas," said Chambers. "We believe Cisco is better positioned than ever to lead the networking industry."

The company also completed initial installations of its next-generation 12000 gigabit switch router in service-provider accounts.

Analyst feedback on the company has been positive of late. A recent report from Martin Pyykkonen, an analyst with Furman Selz, said, "We continue to emphasize that what's new about the positive fundamental Cisco story is the strength of the company's product cycle as the company is in a strong position across its switching, routing, and access products, for the first time in the past two years."

Chambers said Cisco continues to be pleased

Chambers on the quarter
with its financial performance in the Americas. He pointed out that European sales are improving, even while Asia has proven to be a challenging market for the company. Chambers added that Cisco remains concerned, however, about underlying economic conditions in some parts of the world, the spending cycles of service providers, and the entrance of new competitors into the market.

Cisco's positive earnings report comes as Ascend Communications officials spoke of unpredictable financial results in coming quarters due to varying market conditions (See related story).

Cisco also announced a three-for-two stock split for shareholders of record as of November 18, 1997. The split is the sixth since the company went public in 1990.