Network manufacture Cisco has documented a higher profit for its first quarter, powered by cost cutting measures and strong sales growth. The three months commencing October, the company reported a net income of ¢2.09bn (£1.83bn), up 17.7 % year over year. Earnings per share rose 18.2 per cent to ¢39.
After adjusting for exceptional items totalling ¢663m, non-GAAP net income amounted to ¢2.57bn or ¢0.48 per share, compared to ¢2.32bn or ¢0.43 per share for the same quarter, a year ago. Analysts' average estimate for the quarter was 0.46 per share, according to Reuters. Notwithstanding challenging market conditions, Cisco posted first-quarter net sales of ¢11.88bn, 5.5 % higher than the previous year level. Analysts expected ¢11.77bn for the quarter.
The total product revenue increased about 4 % year over year and service revenue rose by almost 12%. Geographically speaking, total revenue increased 7 % for the Americas and 10 % for Asia-Pacific, Japan and China, while revenues for the EMEA were almost flat.
CEO John Chambers stated, "We delivered record results this quarter with revenue growth of 6 % and strong earnings per share growth demonstrating our vision and strategy are working".
Chambers further went onto say, "Our innovation engine, operational discipline and on-going evolution are enabling us to differentiate in the market." In line with the company's cost cutting initiatives, designed to reduce expenses by about 1bn, operating expenses declined to 4.59bn from 4.68bn.
In 2011, the switching and storage products provider shed 10,000 jobs and was planning a further 1,300 cuts earlier this year. Cisco stated that the on-going debt crisis in the Eurozone continues to affect its day to day business. Chambers also said, "We are modelling Europe to get worse before it gets better". It has been reported that product orders for the quarter were stable year over year. In the past quarter, the company recorded a 13 % year-over-year growth in product orders.
Looking into the future, Cisco expects second-quarter non GAAP earnings to come in the range of ¢0.47 to ¢0.48 per share. It reported earnings of ¢0.47 per share a year earlier. Cisco’s quarterly revenues are expected to grow in the range of 3.5% to 5.5 %, compared to an 11.6% growth in the second quarter of 2012.