Networking is good for business

Feb 7, 2008 07:51 GMT  ·  By

Networking giant Cisco Systems announced a 7.2 percent rise in quarterly profit. The company has announced increased revenue especially by selling its telephony gear. The company's figures were just as expected by the Wall Street analysts, and brought Cisco a raise of 1.2 percent in its shares.

"One of the key issues last quarter was weakness in U.S. and U.K. enterprise, so it's important to look for continued trends in that area as well as what they say about the economy," said Scott Neuendorff, research analyst with Hester Capital Management.

Cisco is also manufacturing networking equipments such as routers, switches and access points, that also keep selling well. Company officials announced that its profit for the second quarter was $2.1 billion (33 cents per share), while the year-ago quarter brought only $1.9 billion (31 cents a share). The overall sales grew 16.5 percent to $9.8 billion and also matched analysts' expectations.

"January is usually the seasonally softest quarter for them. All in all, I'm encouraged by this, and I think our long-term thesis for Cisco as a global-growth story is well under way," claimed Eric Marshall, a portfolio manager at Hodges Fund.

World's number one manufacturer of networking equipment gets most of its revenue from the corporate and enterprise markets. The company is the only manufacturer of professional networking gear to power datacenters, office networks and Internet Service Provider businesses. Cisco is also drawing substantial profit from providing networking solutions and know-how, as well as from implementing its own technologies in giant networks.

More recently, Cisco has taken a grip at new markets such as video conference and high-end video conference. Moreover, the company is currently owning television set-top box maker Scientific Atlanta, and plans to deliver high-definition television on the American continent.

The company's shares yesterday closed down 18 cents at $23.08 on the Nasdaq, but in after-hours trade, the stock rose to $23.84.