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Cisco revenue, profit rose in Q1

Strong global growth covers weakness in the U.S. enterprise market

Cisco Systems posted a double-digit rise in revenue in its fiscal first quarter ended Oct. 27, with an even bigger gain in profit.

First-quarter revenue was US$9.6 billion, up nearly 17 per cent from US$8.2 billion in last year’s first quarter. Net income rose more than 37 per cent to US$2.2 billion from US$1.6 billion a year earlier.

In a statement, chairman and CEO John Chambers cited “balanced execution across the company” in the revenue and profit rise. Chambers sees a strong future for Cisco with a second phase of Internet investment driven by multimedia and Web 2.0 technologies. As the biggest maker of routers for the Internet core and enterprises, the San Jose, California, company wins when IP (Internet Protocol) traffic grows.

Growth in carrier router sales was a high point of the quarter, Chambers said in a conference call following the earnings report. High-end router revenue grew about 28 per cent, driven by demand for IPTV and other video applications. Switching revenue grew 8 per cent, possibly held back by enterprises waiting for upgrades to the Catalyst 6500 and 4500 lines that were announced Tuesday, Chambers said.

The only major weak point Chambers cited was in the U.S. enterprise market, where orders grew in single digits. That weakness came in part from overall trends in the nation’s economy, with orders from financial services and automotive companies declining, he said. The company expects U.S. enterprise growth to remain lumpy.

U.S. woes are less likely to drag down the world economy now, and globalization is helping drive growth in U.S. enterprises, Chambers said. In Cisco’s top accounts, about 60 per cent of product orders are for deployments outside the country, versus just 45 per cent a few years ago, he said.