Cisco bests estimates in first quarter

Cisco's fiscal first quarter earnings topped expectations with net income of $2.2 billion, or 35 cents a share on revenue of $9.6 billion. Excluding charges, Cisco reported earnings of $2.5 billion, or 40 cents a share.

According to Thomson Financial, Wall Street expected Cisco to report 36 cents a share on revenue of $9.53 billion. Cisco said both of its earnings figures included a tax gain of 3 cents a share. In any case, Cisco beat estimates with revenue growth of 16.7 percent from a year ago.

Other odds and ends from Cisco's statement Wednesday:

• Cisco had $24.7 billion in cash and equivalents at the end of the first quarter.
• Inventory turns were 10.3 in the first quarter, flat with the fourth quarter.
• In the fiscal second quarter, Cisco projects revenue growth of 16 percent from a year ago. Revenue in the second quarter is expected to be $10.51 billion, ahead of projections of $9.8 billion. Total gross margin will remain at 65.5 percent.

On the earnings conference call, Cisco CEO John Chambers said the following:

• The company can grow revenue in the 12 percent to 17 percent range over the long run. The company expects annual revenue growth for fiscal 2008 to be in the 15 percent to 16 percent range.
• Order growth was solid with the book-to-bill ratio at 1.0. That's high for the first quarter historically.
• Chambers said Cisco performed well across product lines and geographies. He talked up "phase 2 of the Internet," which is about collaboration.
• Router revenue was up 18 percent and switches up 8 percent. Advanced technologies revenue was up 27 percent from a year ago. Ten product families have more than $1 billion in revenue.
• Cisco is gaining market share in most product categories with a greater wallet share in telecommunications and services. Service revenue is 16 percent of total revenue for Cisco.
• Global commercial market growth was 25 percent year over year. Service providers growth was in high teens. Video was a big driver. Network loads are expected to increase 400 percent over the next few years.
• Cisco thinks it is the example of using Web 2.0 in an enterprise setting.