Cisco Systems Inc.'s (CSCO) fiscal third-quarter earnings rose 20% as the networking company's margins and revenue continued to strengthen.
The latest quarter marks Cisco's second straight quarter of improved earnings, which follows a yearlong streak of year-over-year profit declines.
The company is in the midst of a turnaround after restructuring last year to focus on core product areas such as routing and switching gear that shuttle data between computers. Cisco has said it is benefiting from telecommunications and other companies' need for more robust networks to support mobile and cloud computing.
"We are successfully executing against our long-term strategic plan of growing profit faster than revenue, and in a cautious IT spending environment, we continue to outperform our competitors," said Chairman and Chief Executive John Chambers.
As the world's dominant maker of networking devices that support Internet traffic, Cisco is often seen as a bellwether of companies' technology spending plans.
For the quarter ended April 28, Cisco posted a profit of of $2.17 billion, or 40 cents a share, up from $1.81 billion, or 33 cents a share, a year earlier. Excluding stock-based compensation, restructuring-related impacts and other items, per-share earnings were up to 48 cents from 42 cents. Revenue rose 6.6% to $11.59 billion.
The company's February forecast called for earnings between 45 cents and 47 cents a share and revenue growth of 5% to 7%.
Gross margin widened to 61.9% from 61.3%.
The company's product segment, its biggest top-line contributor, saw revenue rise 5% while its services segment's revenue increased 13%.
Historically one of Silicon Valley's most active buyers, Cisco has focused more recently on acquiring start-ups and small companies. Last week, Cisco agreeed to acquire Truviso Inc., a real-time network data analysis and reporting software maker, and in March, said it would buy ClearAccess, a maker of customer-premise-equipment management software. However, the company earlier this year also agreed to acquire video-software maker NDS Group Ltd. for $4 billion, the company's biggest deal in more than two years and a reflection of Cisco's focus on video.
Shares slipped 2.4% to $18.33 after hours. The stock reached a 52-week high last month, but has since pulled back 12% through the close.
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; firstname.lastname@example.org