After announcing it had lowered its quarterly sales target in February, Cisco’s third-quarter profit exceeded analysts’ expectations by 2 cents per share.

San Jose, Calif.-based Cisco reported third-quarter net sales of $9.8 billion, which was a 10.4 percent increase compared with the same quarter a year ago.

Cisco’s profit was $1.77 billion, or 29 cents per share, for the three months ended April 26, which was a 5.4 percent drop from the $1.87 billion the company reported in the same time frame a year ago.

Subtracting one-time charges, Cisco earned 38 cents per share, which was 2 cents above the average estimate of analysts who were polled by Thomson Financial.

Cisco’s cash flows from operations were $3 billion for the third quarter of fiscal 2008, compared with $2.4 billion for the third quarter of 2007, and compared with $2.4 billion for the second quarter of fiscal 2008.

The company’s cash, cash equivalents and investments were $24.4 billion at the end of the most-recent third quarter, compared with $22.3 billion at the end of the fourth quarter of fiscal 2007, and compared with $22.7 billion at the end of the second quarter of fiscal 2008.

“In the quarter, Cisco delivered solid financial results driven by our focus on innovation, our broad and growing global footprint, and our teams' focus on delivering results," said Cisco Chairman and CEO John Chambers. “Our optimism lies in our vision that the network is a strategic asset to optimize productivity and to enable collaboration in the second phase of the Internet, both of which are priorities for our success. The network is also a focal point for innovation, helping Cisco enter new and adjacent markets, as well as strengthen or expand our positions in large, established markets."

Chambers cited the slowdown in the U.S. economy for slower sales here, but the demand for Cisco’s gear was strong in Japan, China, India and other countries.

Cisco included the sale of its DOCSIS 3.0 gear to Canadian cable operator Videotron, which earlier this year became the first cable operator in North America to rollout faster Internet tiers by using DOCSIS 3.0-based channel bonding. Comcast also announced a channel bonding, or wideband deployment, last month in the Minneapolis/St. Paul area that uses Cisco’s cable modem termination systems (CMTSs) and modems.

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