Cisco Reports Q2 Profit Increase, Sees Challenge in European Market

Cisco Systems, Inc. releases its fiscal second quarter earnings report, and compared to the same quarter in 2012, the company’s revenue increased by 5 percent to $12.1 billion and income grew by 6.2 percent to $2.7 billion. Moreover, Cisco is said to be gaining a stronghold in both the Americas and Asia, although Europe, which accounts for around a quarter of the company’s business, posed a challenge with its 5 percent drop in revenue. The Americas were up to 9 percent in revenue, while the Asia-Pacific region was up by 8.3 percent.

“We are seeing early signs of stabilization in government spending and also in probably a little bit over two-thirds of Europe,” said Cisco CEO John Chambers, “but I want to watch that for at least another quarter before I get really excited about it.”

Frank Calderoni, chief financial officer at Cisco, added that the company’s acquisitions, including networks firm Meraki, and the sale of Linksys to Belkin would help fuel growth. And regarding Cisco’s Q2 earnings, Calderoni commented (as transcribed by Seeking Alpha), “Each of these actions fits within our strategy to accelerate the growth and profitability of our business, and with each acquisition we acquire talent and expertise in addition to intellectual property.”

Cisco acknowledged that, even if the company’s core business is in routers and switches, its cloud-computing equipment and data-center solutions paved the way toward profitability. In addition, mobility, service-provider video, and wireless infrastructure played a part in Cisco’s Q2 success. Year over year, the company’s data center, in particular, was up by 65 percent. Cisco’s wireless business, on the other hand, registered a 27 percent growth.

“Cisco delivered record earnings per share this quarter and record revenue for the eighth quarter in a row in a challenging economic environment,” said John Chambers.

Cisco claims that its UCS offering has amassed around 20,000 customers, which corresponds to an 87 percent increase, and credits its 3,000 channel partners for the growth.

“In terms of the future, we are making solid progress towards our goal of becoming the #1 IT company in the world,” Chambers said. “As new markets grow and are created, such as the Internet of Everything, it’s very easy to see how the intelligent network is at the center of that future. Our customers already understand that Cisco has the architectures, solutions and services to best help them deliver the business results they need and we are honored to work with them and serve them each and every day.” (KOM) Link. Link. Link.