Cisco Systems, Inc. (CSCO: Quote), the world's largest computer networking gear maker, said Wednesday after the markets closed that its fourth quarter profit climbed 56% from last year, as sales increased and operating expenses declined.
The company's quarterly earnings per share, excluding items, just managed to beat analysts' estimate as did its quarterly sales.
The company also said it has increased its quarterly dividend for the first quarter of fiscal 2013 by 75% to $0.14 per share. The new dividend is payable on October 24 to all shareholders of record on October 4.
"Cisco has the financial strength and flexibility to effectively invest in our business, pursue strategic opportunities, such as acquisitions, as well as return a minimum of 50% of our free cash flow annually through dividends and share repurchases to our shareholders," said Frank Calderoni, Cisco's Chief Financial Officer.
Cisco shares are currently gaining 4.67% in after hours trading after closing the day's regular trading session at $17.35, up 18 cents or 1.05%. The shares trade in a 52-week range of $14.90 to $21.30.
The latest quarter marks Cisco's third consecutive quarter of higher profit following four quarters of year-over-year profit declines.
The company has been struggling with rising costs that has threatened to derail its earnings growth. To reduce costs, Cisco has cut thousands of jobs. The company said last month that it will cut about 1300 jobs, or about 2% of its global workforce, as part of a continuous process of simplifying the company as well as assessing the economic environment in certain parts of the world. It was in July last year that Cisco said it would eliminate nearly 6,500 jobs globally in an attempt to cut mounting costs.
For the fourth quarter ended July 28, 2012, the San Jose, California-based company reported net income for the fourth quarter of $1.9 billion or $0.36 per share, compared to $1.2 billion or $0.22 per share for the year-ago quarter.
Excluding items, adjusted net income for the fourth quarter was $2.5 billion or $0.47 per share, compared to $2.2 billion or $0.40 per share in the prior year quarter.
On average, 39 analysts expected the company to earn $0.46 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Cisco, which makes the routers and switches that direct computer and telecommunications traffic over corporate networks and the Internet, said net sales for the fourth quarter rose 4.4% to $11.69 billion from $11.20 billion in the same quarter last year. Thirty-eight analysts had a consensus revenue estimate of $11.60 billion for the fourth quarter.
Product sales for the quarter increased 2.6% to $9.2 billion, while services revenue for the quarter grew 11.7% to $2.5 billion.
During the fourth quarter, Cisco repurchased 108 million shares of its common stock for $1.8 billion, taking the full fiscal year total to 262 million shares purchased at a cost of $4.4 billion. As of July 28, the company had repurchased and retired 3.7 billion shares of its common stock for an aggregate purchase price of about $76.1 billion since the inception of the stock repurchase program. The remaining authorized amount for stock repurchases under that program is about $5.9 billion with no termination date.
Cisco's balance sheet looked rock solid. The company ended the fourth quarter with cash and cash equivalents and investment of $48.7 billion, compared to $48.4 billion at the end of the previous quarter and $44.6 billion at the end of fiscal 2011.
Cisco is aggressively pursuing the acquisition-led growth strategy, diversifying its business and entering consumer markets. In March, completed the acquisition of privately held Lightwire, Inc., which develops advanced optical interconnect technology for high-speed networking applications. Cisco has also acquired privately held ClearAccess, Inc. Last month, Cisco completed its acquisition of NDS Group Ltd., a provider of video software and content security solutions.
Cisco is viewed as a technology-industry bellwether because it dominates the market for routers and switches. Since the company's latest results are for the full month of July, instead of June for many of the technology giants, they are also seen as an early indicator of industry trends.
Juniper Networks, Inc. (JNPR), which competes with Cisco in the router industry, last month reported a 50% drop in its second quarter profit, hurt by lower revenue and weaker margins. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue. At the same time, the company gave a downbeat outlook for the third quarter.
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by RTT Staff Writer
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