Cisco's solid Q1 gains leave investors unmoved

Sitting pretty on $17 billion cash

By Ashlee Vance in Chicago • Get more from this author

Posted in Financial News, 9th November 2004 23:12 GMT

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Despite pulling in a healthy $6.0bn in revenue, Cisco Systems didn't do enough during its first quarter to please investors.

Cisco's first quarter results came in just as analysts had expected with the company posting earnings per share of $0.21. Ciscos' gains came on the back of the 17 per cent year-over-year rise in revenue from last year's $5.1bn and net income of $1.4bn - a 29 per cent rise over the $1.1bn reported one year earlier. Investors pushed Cisco shares slightly lower in the after-hours markets, as they digested the performance news.

Cisco is always seen as the major networking bellwether and often as an indicator for the IT market as a whole. Many analysts and investors had been hoping, as they are wont to do, that Cisco would deliver a glowing message about the technology sector's prospects in the coming months. Not so. Cisco is looking for second quarter sales to come in just 1 per cent to 3 per cent higher than the first quarter sales. Analysts were looking for at least a 3 per cent hike on average.

During the first quarter, Cisco took a number of steps to boost its bottom line. The company stashed away $1.5bn in cash. Cisco now has $17.7bn in cash and investments.

What's the company doing with this money? Well, Cisco repurchased $3 billion worth of shares during the first quarter. In addition, Cisco acquired Actona Technologies ($90m), dynamicsoft ($69m), Parch Technologies ($14m), P-Cube ($213m) and Procket Networks ($92m), during the period. ®