Cisco Systems Inc. Tuesday posted pro forma earnings per share of US$0.15 for its fiscal third quarter on revenue that was down slightly from the same period last year.
The networking giant reported revenue of $4.6 billion for the period, which ended April 26, down from $4.8 billion a year earlier. On a pro forma basis, excluding various items, net income was $1.1 billion, up from $838 million from the third quarter of fiscal 2002. Pro forma earnings per share were $0.11 in the year-earlier period.
Using GAAP (Generally Accepted Accounting Principles), the company posted net income of $987 million and earnings per share of $0.14, up from $729 million and $0.10 per share a year earlier.
Analysts surveyed by Thomson First Call had expected earnings per share of $0.14 on revenue of almost $4.6 billion.
The quarter saw Cisco act on its determination to compete with rivals on the low end, agreeing in March to acquire Linksys Group Inc. in a deal that is expected to close in the current quarter. The company also unveiled its Cisco 3750 Series stackable switches for medium-sized companies and enterprise branch offices, which will begin shipping this quarter.
For the fiscal fourth quarter now in progress, the company expects revenue to remain flat from the third quarter, Cisco President and Chief Executive Officer John Chambers said in a conference call to discuss the results. However, he expressed growing optimism.
"In areas that we can focus on or control or influence ... I continue to be even more optimistic than I was going into the last quarter," Chambers said.
Other factors, such as the economic outlook of Cisco's customers, are less certain, he added.
"I am just a little more cautiously optimistic about the external factors entering Q4 than I was entering Q3," Chambers said. Cisco's business will benefit from an eventual upturn in the general economy, but only after its customers see their own business improve, he said, repeating a view he expressed over the last several quarters. Enterprises are still cautious with capital investments, and capital spending by many service providers fell in the quarter, he said.
Cisco's core products -- routers and switches -- continued to bring in the lion's share of its revenue as the breakdown between product segments stayed roughly the same as in the previous quarter. Routers brought 27 percent of revenue, up from 26 percent in the second fiscal quarter. Switches contributed 41 percent, the same as the previous quarter. Access equipment fell to 4 percent from 5 percent of revenue and services contributed 18 percent, up one percentage point.
Revenue from the "other" category, which includes a set of newer technologies from Cisco such as storage networking, security and IP (Internet Protocol) telephony, contributed 10 percent, down from 11 percent.
The breakdown of orders by region remained more steady than expected from the previous quarter in light of international events, Chambers said. The U.S. market brought 45 percent of orders and other markets in the Western Hemisphere contributed 5 percent, both the same as in the previous quarter. Europe, the Middle East and Africa contributed 32 percent, compared with 31 percent. Japan brought 8 percent, up from 5 percent, partly for seasonal reasons, and the Asia-Pacific region contributed 10 percent, down from 12 percent.
Late Tuesday afternoon following the report, Cisco's Nasdaq stock (CSCO) had fallen 1.76 percent to $15.62 on the after-hours Island and Archipelago markets.