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Cisco Profit Jumps 44%

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2/8/2012 5:26 PM ET
(RTTNews) - Cisco Systems, Inc. (CSCO: News ) said Wednesday after the markets closed that its second quarter profit rose 44% from last year, helped by higher sales and better cost control. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly sales.

The world's largest computer networking gear maker reported GAAP net income for the second quarter of $2.2 billion or $0.40 per share, compared to $1.5 billion or $0.27 per share for the year-ago quarter and $1.8 billion or $0.33 per share in the previous sequential quarter.

Excluding items, non-GAAP net income for the second quarter was $2.6 billion or $0.47 per share, compared to $2.1 billion or $0.37 per share in the prior year quarter and $2.3 billion or $0.43 per share in the prior quarter.

On average, 39 analysts polled by Thomson Reuters expected the company to earn $0.43 per share for the second quarter. Analysts' estimates typically exclude special items.

This marks the first time in five quarters that Cisco's profit has increased year-over-year.

San Jose, California-based Cisco, which makes the routers and switches that direct computer and telecommunications traffic over corporate networks and the Internet, said net sales for the second quarter rose 11% to $11.53 billion from $10.41 billion in the same quarter last year. Second quarter net sales grew 2.4% sequentially. Thirty-eight analysts had a consensus revenue estimate of $11.23 billion for the second quarter.

"We delivered strong performance this quarter with record revenue and earnings per share," said John Chambers, Cisco chairman and CEO. "We are executing well on our three-year plan to drive earnings faster than revenue. Our operational focus continues to yield positive results -- we hit our billion dollar expense reduction a quarter early"

Product sales for the quarter increased 10.7% to $9.12 billion from $8.24 billion a year ago, while services revenue for the quarter grew 11.1% to $2.41 billion from $2.17 billion last year.

Cash flows from operations for the second quarter were $3.1 billion, compared to $2.6 billion for the prior year quarter and $2.3 billion for the prior quarter.

During the second quarter, Cisco repurchased 26 million shares of its common stock for $466 million. In November 2010, Cisco's board of directors authorized up to $10 billion in additional repurchases of its common stock under the stock repurchase program, increasing the authorized amount of aggregate stock repurchases to $82 billion. The remaining authorized amount for stock repurchases under the program as of January 28 was about $8.7 billion with no termination date.