Cisco profits drop 12 percent but stock rises on UK and US growth

A Cisco logo on a building

Cisco saw revenues drop 5.5 percent in the third quarter of its 2014 financial year to $11.5bn, compared with the same period last year, as competition from rivals hampered market growth.

The drop in revenue led to a fall in profits of 12 percent from $2.5bn to $2.2bn, but this was ahead of market estimates, causing the firm’s stock price to rise by over six percent in pre-market trading on the NASDAQ.

Cisco is usually regarded as one of the tech sector’s financial bellwethers so, while the drop in revenues and profits will be disappointing, improvements in US and European orders will be welcomed by many.

The company said that US commercial and enterprise orders rose 10 percent year on year, while UK orders rose seven percent. Northern Europe was up four percent.

Cisco also saw rising datacentre revenue growth of 29 percent, while its acquisition of SourceFire appears to be paying off, with revenues up 10 percent and orders up 20 percent year on year.

The areas that hurt Cisco were emerging markets, where orders declined seven percent, and the BRIC nations of Brazil, Russia, India and China, where orders declined 13 percent.

In light of all this Cisco chief executive John Chambers said he was pleased with the numbers as the company continues to embrace new market trends to boost income.

“I’m pleased with our performance in Q3. Our financial results exceeded the guidance we provided last quarter as we demonstrated clear progress on returning to growth,” he said.

“The entire team is focused on moving Cisco forward aggressively, and we remain confident in our long-term goal to be the number one IT company.”

As part of this push Cisco touted its work to meet the growth of the Internet of Things and cloud computing. The firm recently touted plans to invest $1bn in its ‘Intercloud’ network that will enable it to compete with the likes of Amazon Web Services and VMware for new business.

15 May 2014 | 10:32 am – Source:

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