Cisco Revenue Up 15 Percent

"The majority of our customers are cautiously optimistic about the economic direction on a global basis. However, this continues to be balanced by an unusual caution on both [capital expenditure] commitments and hiring," said John Chambers, president and CEO of Cisco, during a conference call to discuss the financial results.

For the third quarter, which Chambers said is seasonally a challenging quarter for the networking vendor, Cisco expects sales to rise 1 percent to 3 percent compared to the second quarter.

For its second quarter ended Jan. 24, the company's sales climbed to $5.4 billion, up 15 percent from $4.7 billion the same quarter a year ago.

Cisco reported a profit for the quarter of $724 million, or 10 cents per share, down from $991 million, or 14 cents per share, for the same quarter last year. The quarter included a one-time charge of $567 million due to accounting changes related to Cisco's acquisition of storage vendor Andiamo Systems in 2002.

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Excluding special items, Cisco earned 18 cents per share. Financial analysts expected the San Jose, Calif.-based company to report earnings of 17 cents per share on revenue of $5.29 billion, according to Thomson Financial/First Call.

Cisco's advanced technologies accounted for 15 percent of the vendor's total revenue. That included $165 million from Cisco's Linksys home networking division, up 39 percent sequentially, and $40 million from storage networking, which grew 120 percent over the previous quarter. Chambers said revenue from security and wireless both saw high single-digit sequential growth, while optical networking grew 10 percent. IP telephony revenue dropped 10 percent sequentially even as orders grew by 25 percent compared to the previous quarter, Chambers said.

Shares of Cisco Tuesday closed up 21 cents at $26.41 prior to the announcement.