Cost-cutting, restructuring boost Cisco results
Cisco Systems Inc. raised its dividend as it reported quarterly revenue and earnings that beat estimates, thanks to cost savings and an ongoing restructuring program.
"I'm pleased we are increasing our quarterly dividend for the first quarter of fiscal 2013 by 75 per cent to $0.14 per share," chief financial officer Frank Calderoni said in a statement on Wednesday.
Fourth-quarter net income, excluding items, was $2.5-billion (U.S.), or 47 cents per share, compared with analysts' average estimate of 45 cents a share as compiled by Thomson Reuters I/B/E/S.
Revenue rose 4 per cent from the year-ago quarter to $11.7- billion, compared with a Street view of $11.61-billion.
The San-Jose, Calif.-based company had spooked investors three months ago, when chief executive officer John Chambers cautioned that macroeconomic conditions in Europe could hurt technology spending.
Mr. Chambers told TV news channel CNBC on Wednesday that Europe was still challenging and that it was "going to get tougher before it gets better."
JMP Securities analyst Erik Suppiger said that while investors are happy that the spending cuts are boosting Cisco's profits, revenue growth is essential to the networking giant's long-term success.
"Ultimately the company needs to generate some acceleration in revenue growth," Mr. Suppiger said.
He added that it remains to be seen whether Mr. Chambers can get revenues growing again if he continues to cut spending, particularly sales and marketing.
Cisco kicked of a major restructuring program last year that included plans to slash about 15 per cent of its workforce and cut expenses by about $1-billion.
Last month it announced it would cut another 1,300 jobs across the company.
Cisco shares rose to $18.22 each after closing up 1 per cent at $17.35 on Nasdaq.