Cisco earnings drop on rule change
Sales of the networking company surge in second quarter
By Chris Kraeuter, CBS.MarketWatch.com
Last Update: 4:40 PM ET Feb. 3, 2004
SAN FRANCISCO (CBS.MW) - Cisco Systems announced late Tuesday that fiscal second-quarter net income fell due to an accounting rule change, but the world's largest networking company boosted sales 15 percent to $5.4 billion.
Cisco (CSCO: news, chart, profile) Chief Executive John Chambers said in a press release that the global economy is improving and his company is gaining momentum in the consumer space.
Shares (CSCO: news, chart, profile) fell 26 cents to $26.15 soon after the announcement in late trading.
For the quarter ended on Jan. 24, San Jose, Calif.-based Cisco reported net income of $724 million, or 10 cents a share, on revenue of $5.4 billion. During the same quarter last year, Cisco earned $991 million, or 14 cents a share, on revenue of $4.7 billion.
Excluding a $567 million charge for an accounting change that the company referred to during the previous quarter, Cisco earned 18 cents a share, a penny better than analysts expected. Sales also exceed the average target of $5.29 billion established by Wall Street analysts.
Cisco Systems predicted at the start of the period that revenue could be between $5.15 billion and $5.25 billion with gross margins of 67 to 69 percent.
Actual gross margin was 68.5 percent compared with 68.7 percent during the previous quarter.
During the quarter, Cisco announced it was buying Latitude Communications, a maker of business conferencing products, for $80 million in cash.
Chris Kraeuter is a reporter for CBS.MarketWatch.com in San Francisco
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