Cisco yesterday posted first quarter earnings ahead of earlier market estimates, amid signs that the networking market is finally picking up.

For the quarter ending October 25 (Q1 2004), Cisco reported net sales of $5.1 billion compared with $4.8 billion in Q1 2003 and $4.7 billion in its previous quarter.

"We've begun our fiscal year with a solid quarter of continued operational excellence and year-over-year growth," said John Chambers, Cisco CEO. "We saw strength across our core switching and routing businesses, as well as traction in our advanced technologies. The service provider and public sector segments in particular, continue to be solid markets for our products."

Sales of routers and switches accounted for two-thirds of Cisco's sales, with other areas (storage, security, IP telephony and WLAN technology) playing an increasingly important role in Cisco's overall business.

"The business and technology strategies we put in place 18 to 36 months ago are showing tangible momentum. I am confident our strategies and strong execution throughout the downturn have positioned us well for future growth," said Chambers.

During the quarter, Cisco announced deployments of its high-end routing products with Verizon Communications, China Netcom Group, U's Communications Corporation in Japan, and Australia's Hutchinson and Telstra. It also announced a program of collaboration on network-hosted storage virtualization with IBM, and developments in its storage and IP telephony portfolio.

These included the introduction of an Internet Protocol (IP) telephone, the Cisco IP Phone 7970G, with a high-resolution, colour touch screen.

Looking ahead, Cisco expects second quarter sales to rise by between one to three per cent from Q1 2004. That implies Q2 2004 sales of between $5.15 billion to $5.25 billion. Cisco declined to give an earnings forecast based on these figures. ®