Cisco beats expectations with strong Q2 earnings

Cisco said that aggressive investment during the downturn had paid off

Networking giant Cisco has posted strong second-quarter net sales, showing a rise of eight per cent over the year to $9.8bn (£6.18bn). The figure exceeded its own expectations, and potentially points to a second phase of recovery in the global economy, according to the firm.

Net income for the quarter rose to $1.9bn (£1.2bn), or 32 cents per share, up from $1.5bn (£948m), or 26 cents per share, in the same quarter a year ago.

Cisco chief executive John Chambers, regarded as something of a prophet on the economic situation in the tech industry, said that the figures point to a long period of recovery.

"Our outstanding Q2 results exceeded our expectations and we believe they provide a clear indication that we are entering the second phase of the economic recovery," he said.

Chambers also noted that the company saw continued acceleration and improvement in almost all areas of its business throughout the second quarter, and that this justified its aggressive strategy of investing in the business during the downturn.

"Our focus on innovation, operational excellence and productivity is driving our momentum, and we believe we are extremely well positioned as economies continue to improve and customers increase their technology investments," he said.

Frank Calderoni, chief financial officer at Cisco, added that the second quarter represented the third sequential quarter of positive growth.

"We delivered strong gross margins and added $2.5bn [£1.6bn] in cash from operations, bringing our total of cash and investments to $39.6bn [£25bn]. We believe this gives us a strong foundation to focus on growth and capturing market transitions," he said.

Cisco is currently pushing its TelePresence software into the businesses market, after urging the industry to back its proposal for an open standard for videoconferencing software to drive its take up in the small business market.