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Cisco's Web 2.0 enthusiasm helps profits climb

CEO hails second major internet phase

Bridging the IT gap between rising business demands and ageing tools

Cisco Systems said yesterday that it saw a 25 per cent jump in net income in its fourth quarter, buoyed by the growing popularity of Web 2.0 technologies.

The San Jose, California-based networking behemoth reported a $1.4bn jump in sales (more than 18 per cent) for the Q4 period ended 28 July 2007 as customer demand for network upgrades rose.

It said web-based collaboration service WebEx, which Cisco bought earlier this year for $3.2bn, as well as its teleconferencing system Telepresence, were affecting a change in business operations.

Cisco, which has continued to go from strength-to-strength following healthy growth over the past few quarters, reported net income of $1.9bn or $0.31 per share.

In a separate statement, Cisco's chief executive John Chambers said yesterday the firm would raise the sales growth target to an ambitious 12-17 per cent per year. It had previously been aiming for 10-15 per cent.

Chambers said: "Most important in what we believe will drive Cisco's growth for the next decade is what we are calling the second major phase of the internet's effect on business and communications.

"We believe this phase two of the internet will result in dramatic innovation and productivity increases enabled by collaboration and Web 2.0 technologies."

The switches and routers giant diversified its investment interests somewhat during fiscal 2007 by swallowing up 11 businesses that have included social networking and email security companies.

Cisco also announced yesterday that the firm's chief financial officer Dennis Powell will be replaced by Frank Calderoni. Powell will retire at the end of January 2008 after handing over to Calderoni.

Chambers said: "Now - as we enter a new cycle for the business - is the time [to] evolve our financial leadership team."

The full Cisco Q4 results can be viewed here. ®

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