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Cisco scores with IP Telephony

Cisco's IP telephony business came in big for the company in the third fiscal quarter of 2005, as traditional Ethernet switching seemed to lag.

In fact the IP telephony market generated more than $250 million in revenue this past quarter for the first time ever, CEO John Chambers said during the conference call. This is the second technology area in Cisco's Advanced Technology group to hit this milestone. The first was the security group, which generated over $250 million for the first time last year.

Charles Giancarlo, the company's CTO, said in an interview after the call that he had expected IP telephony to hit its stride right about now.

"There's no question about IP telephony anymore," he said. "Two or three years ago companies were wondering if the technology was ready for prime time. Now it is."

Overall, Chambers said that enterprise spending was down in the third quarter, but the company saw big growth--about 20 percent from the previous quarter--in the service provider market.

Cisco also talked about predictions for its growth. For the fourth quarter, which ends in July, revenues should be up between 4 percent and 7 percent from the third quarter. Cisco predicts revenue growth for the entire year to be between 12 percent and 13 percent, which is on par with what Chambers has been saying since December.