Cisco Beats Expectations In Fiscal Fourth Quarter

For the three months ended July 27, the company earned $772 million, or 10 cents per share, compared with a profit of $7 million, or break-even on a per-share basis, in the same period a year ago.

Excluding special items, the company earned $1 billion, or 14 cents a share, compared with $163 million, or 2 cents per share, last year.

Fourth-quarter sales were $4.8 billion, a 12 percent increase over $4.3 billion last year.

Analysts were expecting Cisco to post a profit of 12 cents per share on sales of $4.9 billion, according to a survey by Thomson First Call. In April, the company cautiously said its revenue would be "flat with a slight upward bias" over third-quarter sales of $4.8 billion.

"This was another solid quarter for Cisco, despite the ongoing challenges in the economy," said John Chambers, Cisco's chief executive. "We continued to focus on what we can control, and the results speak for themselves."

Still, the company believes fiscal first quarter revenue will only be flat to up slightly sequentially.

"We will continue to budget very conservatively," Chambers said. "Whether the recovery is in one quarter or multiple quarters away, we will be ready."

Chambers also addressed rumors about changes in executive leadership. Chief financial officer Larry Carter plans to retire next May, though Chambers said he will try to keep him longer.

Chambers, who did not address rumors about his own future, said Carter would be replaced by Dennis Powell, currently vice president of corporate finance.

"Larry has made it clear he is to retire next May on his 60th birthday," Chambers said. "My goal is I would like to keep him well beyond that time period."

Last year, Cisco was struggling to overcome sharply lower demand for its routers and other equipment that handle traffic over the Internet as dot-coms faltered and then larger businesses pulled back on spending.

The company shed 8,500 jobs and wrote off $2.25 billion of inventory.

Since then, the situation at Cisco seems to have improved.

In May, Cisco hinted of an upturn in tech spending, fueling a quick but short-lived rally in the markets. Third-quarter sales and revenues beat Wall Street expectations, though officials offered only limited and cautious guidance.

In the meantime, the telecom industry's pounding has continued, with the bankruptcy filing of WorldCom and, even more recently, the woes of Internet backbone provider Genuity

But unlike its competition, Cisco is focused more on selling to large businesses outside telecommunications companies. Sales to telecommunications carriers account for only about 20 percent of sales, shielding Cisco from the brunt of that sector's collapse.

Still, Cisco shares are down about 31 percent for the year.

On Tuesday -- before earnings were released -- shares gained 71 cents, or more than 6 percent, to $12.07 on the Nasdaq Stock Market. Afterward, they gained $1.10, or more than 9 percent, in extended-session trading.

For all of fiscal 2002, Cisco earned $1.9 billion, or 25 cents per share, on sales of $18.9 billion, compared with a loss of $1 billion, or 14 cents per share, on sales of $22.3 billion, in fiscal 2001.

The company also announced Tuesday its board has approved an additional $5 billion for stock repurchases. In September, the board authorized $3 billion for the program, of which $2 billion has been spent.

Copyright © 2002 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.