Cisco Systems Inc. (Nasdaq: CSCO) topped analysts' estimates in its fourth quarter Tuesday, raking in $727 million, or 21 cents a share, on sales of $3.55 billion.
First Call consensus expected the network-equipment maker to earn 20 cents a share in the quarter.
Its shares fell 1 1/16 to 58 3/4 ahead of the earnings report.
"The Internet is emerging as a major force behind the strongest U.S. economy in history," said CEO John Chambers in a prepared release. "As a result, we are growing faster than all of our key competitors and have been the fastest growing and most profitable company in the history of the computer industry."
Faced with increasing competition from Lucent Technologies Inc. (NYSE: LU), Cisco delivered a 48 percent increase in sales versus the year-ago quarter when it made $525 million on sales of $2.4 billion.
For the year, Cisco earned $2.55 billion, or 75 cents a share, on sales of $12.15 billion. That's a 43 percent jump versus fiscal 1998 when it made $1.88 billion, or 58 cents a share, on sales of $8.49 billion.
Analysts were generally impressed with the quarter.
``Most surely growth is slowing in the enterprise (big business) market,'' said analyst Michael Cristinziano, an analyst at Gerard Klauer Mattison in New York, ``But overall, it was a near flawless quarter; you'd be hard-pressed to find anything wrong.''
In the quarter, Cisco completed the acquisition of Amteva Technologies, Inc., for approximately $159 million and took a one-time charge of $81 million. It also bought GeoTel Communications Corp., taking another charge of $16 million.
Including those charges, Cisco earned $635 million, or 18 cents a share.
On Monday, Cisco announced plans to invest $1 billion in KPMG Consulting's Internet services business to deliver Internet-based services for telecommunication and enterprise markets. On Tuesday, Lucent announced it would acquire International Network Services for $3.7 billion.
Last quarter, Cisco pocketed $646 million, or 38 cents a share, on sales of $3.15 billion. Adjusting for a stock split, Cisco earned 19 cents a share.
Cisco's stock performance has been nothing short of spectacular. After splitting 2-for-1 in June, the stock surged to a 52-week high of 69 1/4 in July.
Cisco has been making headway in landing telecommunications contracts. But critical for Cisco and Lucent, analysts said, will be which company AT&T Corp. (NYSE: T) and Sprint (NYSE: FON), which is developing a packet-based network called Spring ION, pick to provide the gear. AT&T, with its recent acquisitions of cable companies, is aggressively pushing to transmit voice over cable lines.
Chief Executive John Chambers said in an interview that its relationship with AT&T was going well. ``We view AT&T as a very strategic partner and I believe they view us the same way.''
Internationally, Asia posted strong gains. Fourth-quarter orders in the Americas rose 45 percent from a year ago, increased 55 percent in Europe, and rose 60 percent in Asia, excluding Japan. Orders in Japan rose 28 percent while South America, excluding Brazil, were up 20 percent.
Thirty-five of the 36 analysts following the stock maintain either a "buy" or "strong buy" recommendation.
Reuters contributed to this report.