Cisco earnings essentially flat but beat estimates

NEW YORK: Earnings at Cisco Systems Inc, the world's largest maker of computer networking gear, were essentially flat in its latest quarter as it boosted spending on research and marketing faster than its sales rose.

Cisco earned $2.20 billion, or 37 cents per share in its fiscal first quarter, which ended Oct 25. In the same quarter last year, it earned 0.2 percent more, which amounted to 35 cents per share. Per-share earnings rose in this year's quarter because of stock buybacks.

Excluding items related to employee compensation and acquisitions, earnings were 42 cents per share. That exceeded the 39 cents that analysts polled by Thomson Reuters were expecting.

Sales were $10.3 billion, up 8 percent from a year ago. They matched the analyst estimate.

Cisco shares fell 94 cents, or 5.1 percent, to $17.39 in regular trading Wednesday. In extended trading, after the release of the results, the stock was up 3 cents.

The sales increase is lower than the company's long-term goal of 12 percent to 17 percent growth year over year. Cisco cited the global pullback in corporate spending. Cisco started seeing the effects of the credit crunch as early as year ago in a few areas of its business, but things got worse in the recent quarter.

The increase in expenses for sales, marketing, research and design is consistent with the company's stated strategy of using its abundant cash to invest through a downturn, to grab market share and emerge stronger once the market improves.