Networking provider Cisco Systems reported that its fourth quarter revenue rose 27% over the previous year's fourth quarter, fueling a 79% jump in profits. Net profit was $1.9 billion and revenue was $10.8 billion.
In spite of the rosy results, Cisco stock dived more than 8% in after hours trading Wednesday, because the revenues were marginally below expectations of some Wall Street stock analysts. The scenario -- solid financial report, followed by dropping stock prices -- has been repeated often in recent months as investors, looking for even better results, have vented their disappointment by selling high tech stocks.
In a conference call with analysts, Cisco chairman and CEO John Chambers used the words "unusual uncertainty" to describe the economic environment and that seemed to spook investors. The quarter, however, missed analysts' projections by the slimmest of margins.
"This was yet another very strong quarter with a number of record financial results for Cisco, closing the fiscal year in a tremendous position of strength -- a compelling financial model, a well-tuned innovation engine and solid execution on our growth strategy," said Chambers in a statement.
Chambers alluded to the uncertain global economy, but said Cisco's financial model and profit generation continues to serve the company well. "We are very confident in our strategy," said Chambers, "and will continue to aggressively move into new areas where the network is becoming the platform."
In recent quarters, Cisco has been moving beyond its traditional strength in routers and switches and targeting video, data centers, and teleconferencing. It has also teamed up with storage giant EMC and EMC's VMware as both firms spread their tentacles beyond their traditional markets.
The company continued its timeworn acquisition strategy during the quarter acquiring digital signal processing solutions provider CoreOptics, design consultancy MOTO Development Group and the set-top business of China's DVN Ltd.
Cisco also moved aggressively into Russia where it plans to invest as much as $1 billion in partnerships.
Building on its drive into consumer markets, Cisco cited its Cisco Cius business tablet and noted that its Cisco Quad enterprise collaboration platform will soon be available via iPad and iPhone applications.
The company continued to pile up cash, which enables the company to continue its aggressive acquisition program. "During fiscal 2010 we generated more than $10 billion in cash from operations," said CFO Frank Calderoni. "We will continue to use this strong financial position to expand our portfolio."