Cisco reports strong quarter

Cisco Systems posted a $664 million profit for the company's second quarter

of fiscal 2002. Although half the $1.3 billion it earned a year earlier, Wall

Street had expected only about $400 million in earnings. Sales fell 29 per cent

to $4.8 billion from the record quarterly high of $6.75 billion in the same

period a year earlier.

Cisco disclosed its financial results earlier than expected after an email

was accidentally sent to company employees. The email talked about a good

quarter and in which order bookings for products exceeded internal goals.

The results show Cisco remains on top of the networking gear industry and

continues to out-perform competitors such as Lucent. The company's second

quarter profits were double the earnings in the preceding first quarter.

"In almost every area of our business we've seen positive evidence of our

strategy working, from market share gains and cash generation to inventory turns

and gross margin improvements,'' said Cisco CEO John Chambers who called the

results a ''solid quarter.''

Chambers added that customer budgets now have the flexibility to rise,

meaning the networking industry has hit bottom and is starting a new era of

growth be it at a much less frantic pace than during the 1998-2000 era.