Cisco to Jumpstart Hiring Amid ‘Profound Opportunity’

By Kelly Teal Comments
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Cisco Systems Inc. (CSCO) once again is serving as a bellwether for the tech industry. The company’s shares climbed in Thursday trading, leading a broad advance among tech stocks, a day after executives reported a fiscal first-quarter profit.

Granted, the income was lower than the year before, but it still was higher than analysts had expected.

Cisco brought in $1.8 billion, or 30 cents per share, down from a profit of $2.2 billion in the year-ago quarter. However, adjusted income pushed the per-share price to 36 cents – 5 cents higher than what Wall Street predicted.

Revenue totaled $9 billion, which was down from $10.3 billion in 2008’s first fiscal quarter. Again, though, Cisco beat observers’ forecasts. Analysts had projected $8.75 billion in revenue, according to reports.

Quite simply, said an analyst for investment bank UBS, Cisco “beat expectations across the board.”

The improvement came in part from more enterprise orders – 10 percent more – in the United States. The enterprise sector led Cisco into the recession, Nikos Theodosopoulos wrote in a Nov. 5 note to clients, and now, it should get Cisco back out.

As Cisco rebounds, expect the San Jose, Calif.-based equipment maker to “remain aggressive” on M&A and partnerships, Theodosopoulos said. With plenty of cash on hand, the opportunity for those transactions will increase as Cisco strengthens its focus on initiatives such as cloud computing. Cisco has joint ventures for developing cloud computing technology and the company expects such deals to propel its collaboration, virtualization and video efforts.

“A new model of productivity based on collaboration is clearly emerging and we believe this may be the most profound opportunity for businesses in our 25 years as a company,” John Chambers, Cisco’s chairman and CEO, said in a prepared statement on Nov. 4.

That environment is prompting Cisco to plan “targeted hiring for productivity and growth” in adjacent markets, said Theodosopoulos. Job creation would come as welcome news for the company, which, like its peers, has been forced to lay off workers amid the global economic meltdown.

UBS kept its neutral rating on Cisco's shares after the better-than-hoped earnings report.

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