Cisco Reports Strong 3Q, Says SDN To Have Positive Future Impact On Company

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Cisco on Wednesday surprised Wall Street by reporting its ninth consecutive quarter of record revenue and earnings that exceeded expectations.

Cisco Chairman and CEO John Chambers cited a slow but steady improvement in the U.S. and other economies combined with having the kind of products customers need for the company's successful third fiscal quarter of 2014, which ended April 27.

Cisco, in response to questions from analysts on Wednesday's third-quarter conference call, also said that software-defined networking (SDN) will have a positive impact on Cisco in the future, and that its Cisco UCS server business is booming thanks to solutions and architecture sales and not because of bare metal server demand.


[Related: Software-Defined Data Centers: Should You Jump On The Bandwagon?]

For the quarter, Cisco reported sales of $12.2 billion, up 5.4 percent over the $11.6 billion reported for the third fiscal quarter of 2012.

Income on a GAAP basis was $2.5 billion, or 46 cents per share, up about 15 percent over the $2.2 billion or 40 cents per share reported for the same period of last year. On a non-GAAP basis, income was reported as $2.7 billion or 51 cents per share, up from the $2.6 billion or 48 cents per share from last year.

The third-quarter results beat widely reported analyst expectations of $12.18 billion in revenue and earnings of 49 cents a share. The market loved the results and in after-market trading drove Cisco share prices up by 8 percent within a couple hours of the unveiling of the financials.

Cisco did particularly well in the U.S. market, where revenue rose 7 percent to $7.1 billion, Chambers said. That growth was across the board, with U.S. commercial revenue up 13 percent over last year, enterprise revenue up 10 percent, solution provider revenue up 10 percent, and public sector business up 5 percent despite a 3 percent drop in revenue from federal government customers.

"This balanced approach to growth is a positive signal for growth going forward," he said.

Cisco's third-quarter results also stemmed in large part from the company hitting its goals, Chambers said. "Bottom line, we again did what we said we'd do," he said.

Frank Calderoni, Cisco executive vice president and CFO, said Cisco's earnings per share have now grown faster than revenue for six consecutive quarters despite a difficult economic environment.

NEXT: Adoption Of SDN Good News For Cisco: Chambers

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