Cisco Systems Inc. (Nasdaq: CSCO) rolled on without a hitch in the third quarter, as the world's largest network equipment maker posted earnings a little higher than analysts expected.
In fiscal third quarter results released after market close Tuesday, and posted net income of $646 million, or 38 cents a share a share. First Call's survey of 31 analysts predicted a profit of 37 cents.
The company on Monday also announced a 2-for-1 stock split, payable June 21 to anyone owning shares as of market close on May 24. It will be the company's eighth stock split since going public in 1990.
Third quarter sales rose 44 percent year-over-year, to $3.15 billion from $2.18 billion. As usual, Cisco credited Internet growth for driving demand for its routing and switching equipment. The company said it increased its market share in switches for local area networks, as well as in Layer 3 switching.
Company executives, following their pattern in recent quarters, talked up convergence. "The Internet Economy continues to create unprecedented growth opportunities for people, companies, and countries on a global basis," said John Chambers, president and CEO of Cisco. "The new world of integrated data, voice, and video communications is at the center of these opportunities."
To that end, Cisco continued to build its stable of messaging and call center products. The company also announced plans to acquire a pair of two companies that make voice products.
Profit rose 33 percent from pro forma net income $484 million in the third quarter of fiscal 1998, when the company earned 30 cents a share. Net income gained 6 percent sequentially, from $606 million in the second quarter.
Shares of Cisco gained 2 5/8 to 117 5/8 in Tuesday's trading prior to the earnings announcement. Among 31 analysts polled by Zack's Investment Research, 15 maintain the equivalent of "moderate buy" ratings on Cisco, 14 call it a "strong buy", and two have "hold" advisories on the stock.