November 15, 2004

Market-leading networking vendor Cisco Systems last week reported strong growth in sales and profits for the first quarter ended Oct. 30. "It was our sixth quarter of sequential growth, and we had reasonable balance across all of our markets," CEO John Chambers told financial analysts in a conference call.

Sales of advanced technologies such as IP telephony, home networking, and wireless grew by more than 50% year over year, and the company also reported strong growth in sales to telecom service providers.

Cisco's net income was up 29% from a year ago to $1.4 billion. Net sales were $6.0 billion for the quarter, compared with $5.1 billion a year earlier.

After talking recently to 50 CIOs, Chambers said he expects them to continue to invest in IT over the long term, with short-term ups and downs based on confidence in the economy. He told analysts that business-technology managers will keep spending on IT to simplify business operations and improve productivity.

Sales of products to the enterprise and commercial markets grew in the midteens on an annual basis, and executives expect that to continue as a series of new products introduced this year, including a high-end router called CRS-1, gain acceptance. "It takes some tire kicking before a product of this magnitude takes hold," says chief technology officer Charles Giancarlo. The buying cycle for a product like CRS, which 16 customers are testing, can take a year to 18 months, he says.

Cisco reported strong sales for its IP PBX, with orders up 50% year over year. It also shipped 500,000 IP phones in the quarter. "According to analyst reports, we are No. 3 or No. 4 in the world in total PBX shipments," Giancarlo says. "We were zero five years ago."

ABOUT THE AUTHOR
Paul got his start as a newspaper reporter, putting black smudges on dead trees in the 1970s. Eventually he moved into the digital world, covering the telecommunications industry in the 1980...