Copyright 2006 AFX News Limited
AFX International Focus
August 8, 2006 Tuesday 10:07 PM GMT
From Lexis Nexis

SAN FRANCISCO (AFX) - Networking gear provider Cisco Systems Inc. exceeded Wall Street estimates Tuesday with fiscal fourth-quarter profit that was almost the same as in the year-ago period, before the company introduced significant accounting changes.

Net income for the three months ending July 29 was $1.544 billion, or 25 cents per share, compared with $1.540 billion, or 24 cents per share, in the fiscal fourth quarter of 2005.

The newest results would have shown an increase of nearly 22 percent in net income, but for $152 million in compensation expenses related to employee stock options and employee stock purchases. Had those accounting changes been in place last year, Cisco would have reported fiscal fourth quarter profit of $1.265 million, or 20 cents per share, in 2005.

Quarterly sales at Cisco, one of the world's largest makers of routers, switches and other devices that connect computers to the Internet, rose to $7.98 billion from $6.6 billion in the same quarter of 2005. The San Jose, Calif.-based company also produces digital subscriber line and cable broadband equipment, Voice over Internet Protocol telephone service products and network management software.

The $6.9 billion acquisition of Scientific Atlanta Inc., which was completed in February, contributed $582 million to sales in the most recent quarter.

Scientific Atlanta, the world's second-largest seller of cable television boxes after Motorola Inc., also specializes in broadband services such as digital content distribution systems.

Excluding options and other expenses, San Jose, Calif.-based Cisco earned $1.9 billion, or 30 cents per share, compared with $1.6 billion, or 25 cents per share in the fiscal fourth quarter of 2005.

On that basis, which doesn't conform to generally accepted accounting principles, Cisco easily surpassed the mean estimate of 28 cents per share, or $1.76 billion on sales of $7.92 billion, according to a survey of analysts by Thomson Financial.

Cisco earned $5.6 billion, or 89 cents per share, in the 2006 fiscal year on sales of $28.5 billion. Excluding special expenses, Cisco earned $6.9 billion, or $1.10 per share for the year. Wall Street was expecting the company to earn $6.74 billion, or $1.08 per share, on annual sales of $28.42 billion.

The results were released after financial markets closed. Cisco shares lost 12 cents, less than 1 percent, and finished the regular session at $17.29 on the Nasdaq Stock Market. The stock gained 82 cents in after-hours trading.