Summary: Roaring consumer interest in fast Internet video as well as investments by corporations in more powerful routers and switches gave Cisco Systems a 28% boost in fiscal Q1 profit. Net income for the period ended Oct. 28 rose to $1.61 billion, or $0.26/share, from $1.26 billion, or $0.20/share, a year earlier. Sales rose 25% to $8.2 billion, comfortably exceeding analyst expectations. This is the third consecutive quarter in which Cisco's sales have increased at least 15%. The company's shares rose 4.1% after the report and are up 47% on the year. In February, Cisco acquired cable TV set-top box manufacturer Scientific-Atlanta for $6.9 billion. Sales at the unit came in at $584 million, again topping analyst forecasts. Cisco also won lucrative contracts this quarter from South Korea's KT Corporation and from Verizon Communications, which is interested in Cisco's brand new video-conferencing system.
Related links: Earnings conference call transcript: Cisco FQ1 2007 • Additional coverage: TheStreet.com, The Wall Street Journal • Commentary: Expectations High Going into Cisco Earnings, Analysts More Confident in Cisco, Barron's: Cisco To See Ongoing Growth, Cisco Unveils High-End Video Conferencing Technology, Cisco to Offer YouTube-like Service for Businesses
Potentially impacted stocks and ETFs: Cisco Systems, Inc. (CSCO) • Competitors: Nokia Corp. (NOK), Lucent Technologies Inc. (LU), Juniper Networks, Inc. (JNPR), Nortel Networks Corp. (NT) • ETFs: iShares Goldman Sachs Networking Index Fund (IGN), Internet Architecture HOLDRs (IAH), iShares S&P Global Technology (IXN), iShares Russell 1000 Growth Index (IWF), iShares Russell 3000 Growth Index (IWZ)
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