Cisco posts solid Q3 results, manages dicey IT spending

Cisco holds up well during the third quarter in "a cautious IT spending environment," avoiding the shortfalls rivals have faced.

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Cisco Systems' fiscal third quarter results were solid as the company avoided the shortfalls rivals faced.

The company reported third-quarter earnings of $2.2 billion, or 40 cents a share, on revenue of $11.6 billion, up 6.6 percent from a year ago. Non-GAAP earnings were 48 cents a share.

Wall Street was expecting earnings of 47 cents a share on revenue of $11.59 billion. Going into Cisco's earnings, analysts were expecting a mixed quarter. After all, Cisco rivals Juniper, Riverbed and Polycom all struggled with their most recent financial results.

In a statement, Cisco CEO John Chambers said the company plans to grow profits faster than revenue. "In a cautious IT spending environment, we continue to outperform our competitors," he said.

On a conference call, Cisco CEO John Chambers said:

  • The company has taken share in the service provider market. "We remain number one or number two in almost every product market where we play," said Chambers.
  • Cisco maintained share in the enterprise and commercial market.
  • UCS server revenue was up 57 percent from a year ago.

By the numbers:

  • Research and development spending was $1.36 billion in the third quarter, down from $1.43 billion a year ago.
  • Inventory turns were 11.5 in the third quarter, up from 11.1 a year ago.
  • Cisco ended the quarter with $48.4 billion in cash and equivalents.
  • Cisco generated $3 billion in cash flow in the third quarter.
  • Days sales outstanding were 31, down from 37 a year ago.
This story was first published as "Cisco Q3 solid, manages dicey IT spending" on ZDNet's Between the Lines.
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