By John Kell
Cisco Systems Inc.'s (CSCO) fiscal fourth-quarter profit jumped
18% as the network-equipment company's product and services sales
each increased, and as operating expenses were lower than a year
ago.
Even as results came in at the high end of the company's May
expectations, shares fell 3.1% to $25.55 in after-hours trading,
perhaps as investors focused on narrower gross margins. Through
Wednesday's close, the stock has gained 34% in 2013, better than
the broader market.
Cisco, the world's largest supplier of Internet routers and
switches, has inked a string of relatively small acquisitions as it
tries to evolve into a less hardware-intensive
information-technology provider. Last month, the company agreed to
pay $2.7 billion for cybersecurity firm Sourcefire Inc., a deal
that reflects a boom in demand for cybersecurity expertise as
companies and consumers become more aware of hacking threats.
For the quarter ended July 27, Cisco reported a profit of $2.27
billion, or 42 cents a share, up from $1.92 billion, or 36 cents a
share.
Excluding a $172 million litigation expense tied to a patent
settlement with TiVo Inc. (TIVO) in the latest period, as well as
stock-based compensation and other impacts in both periods,
adjusted profit rose to 52 cents from 47 cents a share. Revenue
climbed 6.2% to $12.42 billion.
In May, Cisco projected an adjusted profit between 50 cents to
52 cents a share on revenue growth of 4% to 7%.
Gross margin narrowed to 59.2% from 60.6%.
Sales from the product segment, Cisco's biggest revenue
contributor, increased 6.4%, while revenue from the company's
services segment rose 5.6%.
Operating expenses dropped 3.8%.
Write to John Kell at john.kell@wsj.com
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