Cisco Q1 profit and revenue grew on strong U.S. results

European orders remain weak, but trends toward mobile and cloud computing are helping Cisco, said CEO Chambers

Cisco Systems posted higher revenue and profit in its fiscal first quarter despite weak orders in Europe, as results in the U.S. were strong, the networking company reported on Tuesday.

Revenue hit $11.9 billion in the quarter, up 6 percent from a year earlier, the company said. Net income rose by almost 18 percent to $2.1 billion, with earnings per share of $0.39. Chairman and CEO John Chambers attributed the company's profit in part to strong cost containment. Cisco's fiscal first quarter ended Oct. 27.

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The trends toward mobile and cloud computing are helping Cisco, Chambers said on a conference call with financial analysts.

"The network has never played a more central role," Chambers said.

Not counting certain one-time items, earnings per share was $0.48. That beat analysts' consensus estimate of $0.46 per share according to a poll by Thomson Reuters. Analysts had expected $11.8 billion in revenue, an estimate Cisco also slightly exceeded.

For the current quarter, Cisco expects revenue to grow between 3.5 percent and 5.5 percent.

"We believe the U.S. must lead the global economic recovery," Chambers said. He believes European economies will remain weak and growth in developing countries will not suffice to bring the world economy back.

Cisco continues to make gains as an overall data center vendor, with its Unified Computing server platforms now driving sales of networking gear, Chambers said.

But the company is now working to turn around its collaboration business, Chambers said. That group has recently undergone leadership changes and earlier this year discontinued the company's Cius tablet. Collaboration sales in the quarter were down, especially in its Telepresence high-end videoconferencing unit. While the economy influenced those results, Chambers said there is more work to be done.

"We need to do a better job in collaboration," Chambers said. Cisco is working to more closely integrate its products, including unified communications, Telepresence and the Webex Web conferencing service, under a single call management system. Making the products easier to use is key, he said.

"We are all over this, but we anticipate it being a tough battle," Chambers said.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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