Cisco 4Q12 results beat Street estimates

NEW YORK, USA: Cisco Systems Inc raised its dividend by 75 per cent as the network equipment maker posted quarterly revenue and earnings that beat estimates, thanks to cost savings and an ongoing restructuring program.

Fourth-quarter net income, excluding items, was $2.5 billion or 47 cents per share, compared with analysts' average estimate of 45 cents a share as compiled by Thomson Reuters.

Revenue rose four per cent from the year-ago quarter to $11.7 billion, compared with a Street view of $11.61 billion.

The dividend will rise to 14 cents per share in the first quarter of fiscal 2013, the company said on Wednesday.

The San-Jose, California-based company had spooked investors three months ago, when Chief Executive John Chambers cautioned that macroeconomic conditions in Europe could hurt technology spending.

Chambers told TV news channel CNBC on Wednesday that Europe was still challenging and that it was "going to get tougher before it gets better."

JMP Securities analyst Erik Suppiger said that while investors are happy that the spending cuts are boosting Cisco's profits, revenue growth is essential to the networking giant's long-term success.

"Ultimately the company needs to generate some acceleration in revenue growth," Suppiger said.

He added that it remains to be seen whether Chambers can get revenues growing again if he continues to cut spending, particularly sales and marketing.

Cisco kicked of a major restructuring program last year that included plans to slash about 15 percent of its work force and cut expenses by about $1 billion.

Last month it announced it would cut another 1,300 jobs across the company.

Cisco shares rose to $18.22 after closing up 1 percent at $17.35 on Nasdaq.

Source: Reuters