Internet giant Cisco saw its quarterly profit soar past $1bn (£700m) last week.
Cisco has so far managed to maintain a staggering rate of growth, with its latest figures showing a 55 per cent increase in turnover to $4.92bn.
After accounting for acquisition charges, net profit for the quarter was $662m. John Chambers, Cisco chief executive, said: "We are very pleased with the results and momentum we are seeing."
But Chambers warned that the next quarter might not be as rosy, due to anticipated shortages in component supplies. "We have seen increasing component shortages, which is making it difficult for Cisco to complete orders for large corporate customers," he said. Cisco could feel the squeeze for as long as two years, Chambers added.
The company has experienced its best quarter for over a year in corporate sales, with a 20 per cent growth in enterprise business. This was highlighted by a 40 per cent growth in sales of its Catalyst 4000 and 6000 switches.
By contrast, Cisco rivals Lucent and 3Com have reworked their enterprise business in response to slow growth.
Cisco's latest acquisition, of Arrowpoint for $5.7bn, was its second largest ever and observers have questioned why it paid so much for a company which had a turnover of just $12.4m in 1999. But according to technology analysts, Arrowpoint's 'content switching' technology is fundamental to the rapid growth in application service provision and Web site hosting markets. Cisco's own Internet Director products are said to be between six and 12 months behind Arrowpoint equivalents. The acquisition will allow Cisco to introduce leading technology across its entire switching range.
Other leaders in the 'content switching' market include F5 Labs, Alteon Websystems and Foundry Networks. 3Com has licensed technology from F5, but Nortel - which licenses i-Pivot technology from Intel - may be under pressure to make its own acquisition in this space.
Cisco plans to buy Stockholm-based Qeyton Systems for about $800m.
Qeyton makes dense wave division multiplexing technology, which multiplies the capacity of fibre optic links. It connects inter-office optical networks to the metropolitan area network ring.
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