Telecom sales boost Cisco Q3

Cisco benefited from equipment sales to telecom service providers upgrading for the Internet, and has just reported a good third quarter. Sales were up 44 per cent to $3.15 billion, with earnings up 33 per cent to $646 million, compared with the year-earlier quarter. Around a third of Cisco's sales are to service providers, and these were up 70 per cent on the year-earlier period. The result was marginally better than financial analysts were expecting. Cisco expect to put $2.5 billion of sales through distributors, which is $500 million more than CEO John Chapman forecast in February. At the beginning of this month, Cisco said it would not deliver the TGX-8750 switch it was developing for voice and data products, but would now include the ATM technology in a product later in the year. This will give Ascend Communications (which is being acquired by Lucent) a temporary advantage. One of Cisco's claims to fame is that it reached a market value of $100 billion more quickly than any other company. A 2-for-1 stock split was also announced last night, and the share price rose nearly 7 per cent on the day in after hours trading, after the results were known. When the stock was not split earlier this year, the share price went down. In fact the share price has been very volatile, since it has been as low as $41 and as high as $120 in the last year. ®