SAN FRANCISCO — Cisco Systems managed to encourage investors Wednesday despite sliding quarterly profits and flat revenue growth, prompting a nearly 7 percent run-up in its shares during after-hours trading.
John T. Chambers, chief executive of Cisco, who is trying to restructure and refocus the company after a year of stumbles attributed partly to slow decision-making, has said it would be some time before his efforts produced results.
Cisco has long been considered a bellwether for technology spending, but its internal problems have made it a less reliable stand-in for the broader technology industry. Cisco makes routers and switches used by corporations and government agencies to operate data centers and telecommunications networks.
But spending by the public sector, which makes up a fifth of Cisco’s overall sales, continues to decline. Spending by government agencies, public universities and hospitals fell 4 percent in its fourth quarter, the company said.
Mr. Chambers said, “You are seeing people making tough decisions about what to cut.”
Cisco reported that its net income in the fourth quarter that ended July 30 fell 36.3 percent to $1.2 billion, or 22 cents a share, from $1.9 billion, or 33 cents, in the same quarter a year ago.
The company said revenue climbed 3.3 percent to $11.2 billion, from $10.8 billion.
The adjusted income of 40 cents was slightly above the expectations of Wall Street analysts. They had expected 38 cents a share and revenue of $10.98 billion on that basis, according to a survey of analysts by Thomson Reuters.
The lack of more bad news was enough to buoy the company’s shares. Jason Ader, an analyst with William Blair Company, said that Cisco’s forecast for relatively flat revenue in the first quarter was good news given the convulsions in the stock market recently. It shows some confidence by Cisco in corporate technology spending even as public sector sales are weak.
“People have been looking for stability,” Mr. Ader said. “It was a much more positive call than it has been in a year.”
The gain in Cisco’s shares in after-hours trading on Wednesday made up only part of the more than 40 percent decline over the last 12 months. They rose 93 cents, or 6. 7 percent, to $14.66 in after-hours trading. In regular trading, they fell 33 cents, or 2.3 percent, to close at $13.73.
While Cisco struggled over the last year, smaller rivals like Juniper Networks performed relatively well. More recently, however, Juniper and Brocade Communications Systems, another maker of technology equipment, have warned of slumping demand for their products.
While Cisco’s main primary products faced headwinds, some of its other businesses have showed strong growth in recent quarters. They continued to do so in the fourth quarter with a 32 percent gain in revenue from data center products and 33 percent increase from wireless products.
Mr. Chambers is counting on these newer areas to lift the company as its more mature products retreat or make small gains.
Cisco, based in San Jose, Calif., said it expected operating of 38 cents a share to 41 cents a share in the first quarter, in line with analysts’ expectations.
Article source: http://feeds.nytimes.com/click.phdo?i=b206003007c905a021c854c3d7de08cc
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