Cisco Systems Inc's quarterly results topped Wall Street expectations and Chief Executive John Chambers said the network equipment maker is gaining market share as the global economic recovery accelerates.
Chambers, however, also cautioned investors to wait for more economic data before becoming too optimistic, and shares of the company fell 3 percent in extended trading after gaining 3 percent on Nasdaq earlier on Wednesday.
Given all the uncertainties regarding the strength and shape of the recovery, concerns about the recovery possibly slowing and the unknown extent of job creation, we encourage you to wait for additional economic data before becoming too optimistic, Chambers said on a conference call.
Cisco forecast current-quarter revenue growth of 25 percent to 28 percent year on year. The average Wall Street forecast calls for revenue of $10.68 billion, which would be up about 25 percent from the year-earlier period.
The world's biggest maker of routers and switches said its revenue in the fiscal third quarter through May 1 rose 27 percent to $10.4 billion, above the average analyst estimate of $10.2 billion, according to Thomson Reuters I/B/E/S.
Quarterly profit rose to $2.2 billion, or 37 cents per share, compared with $1.3 billion, or 23 cents a share, a year earlier. Excluding items, profit was 42 cents per share -- higher than Wall Street's forecast for 39 cents per share.
It was a good solid quarter for a major company that tends to not have big positive surprises any more, said Tim Ghriskey, chief investment officer of Solaris Asset Management, though he noted that Cisco's margin might have disappointed some.
This is one of the major bellwethers and the fact that they surprised on the top and bottom line really is positive for the overall market, even though there might be a little bit of profit taking on the slightly disappointing margin news.
Cisco is one of the first major technology companies to report results that include all of April 2010, and its performance and outlook are an indicator for the rest of the technology sector, especially in business spending.
The results underscore Cisco's continued recovery from the technology downturn of 2009. Despite initial fears of a 2001-style freeze in corporate spending, recent results show companies have been quick to resume investment in Cisco's products like routers and switches.
We emerge from this downturn gaining market share, a larger share of the total wallet spend of our customers, Chambers said in a statement. It is clear that our game plan for how to handle economic downturns is hitting on all cylinders.
Earlier on Wednesday, International Business Machines Corp gave a confident long-term profit forecast that bolstered investor sentiment and sent many tech shares higher.
(Additional reporting by Dana Ford, Leah Schnurr and Tiffany Wu; Editing by Richard Chang)