There you have it, proof, once again, that the IT industry thrives. Cisco is the company that comes in with good news as its Q2 results boosted stocks as markets raised confident after the world’s largest maker of computer networking equipment had sales that beat estimates.
Less in less do we get to write about companies that manage to beat analysts’ estimates, as grim as their outlook is. But for Cisco Systems and its investors, Q2 brought a net income boost of 44 percent, leaving behind a 2011 sprinkled with layoffs and heavy cuts.
Bloomberg writes that Cisco Systems’ fiscal second quarter net income went up to $2.18 billion, or 40 cents a share, compared to $1.52 billion a year earlier. Revenue recorded was $11.5 billion, up by 11 percent from the $10.4 billion recorded one year ago.
For Chief Executive Officer John Chambers Q2 results were a confirmation his cost reduction strategy was successfully implemented. Last year was poor for Cisco and brought layoffs, business reductions and a focus on the more profitable products.
Based on the company’s successful second quarter revenue, Chambers predicted he expects Cisco to become the leader in the construction of cloud computing systems and added revenue in the just started quarter to go up by 5 to 7 percent.
Chambers said: “The franchise value of Cisco is continuing to expand. We are much better positioned than most of our competitors”, as sales for collaboration and Internet video products beat analysts’ estimates.
However, Cisco was surely helped by lower prices that gave them a better ranking in the industry’s cut throat competition. Erik Suppiger, analyst at JMP Securities LLP, said: “The company has been talking a lot about getting more aggressive with individual competitors”.
The results brought Cisco positive reactions both from the markets and the analysts. Cisco shares rose 23 cents to close at $20.43, adding another 4 cents in afterhours trading. But investors are still wary that last year’s restructuring might erode the company’s profits.
Matt Robison, analyst at Wunderlich Securities, said: “Obviously one quarter doesn’t confirm that the job is complete, but it sure looks like they’ve gotten the job done. It certainly seems like they’ve gotten their mojo back”.