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Amid enterprise cloud push, Cisco surpasses Q3 expectations

UPDATED: Cisco expects the revenue decline to continue, but not by nearly as much as analysts predicted.
Written by Rachel King, Contributor

Wrapping up a fiscal third quarter that included a major leap into the enterprise cloud game, Cisco published its quarterly earnings results after the bell on Wednesday.

The networking giant reported a net income of $2.6 billion, or 42 cents per share (statement).

Non-GAAP earnings were 51 cents per share on a revenue of $11.5 billion.

Those figures were down from $12.2 billion in revenue with a net income of $2.7 billion during the same quarter last year. On top of that, revenue for the first nine months of fiscal 2014 was $34.8 billion, compared with $36.2 billion for the first nine months of fiscal 2013.

Nevertheless, Cisco did well enough to satisfy analyst expectations this time around anyway.

Wall Street was looking for earnings of 48 cents per share on a revenue of $11.38 billion.

In response, Cisco shares were up by approximately four percent in after-hours trading.

CEO John Chambers reflected on the quarter in prepared remarks:

I'm pleased with our performance in Q3. Our financial results exceeded the guidance we provided last quarter as we demonstrated clear progress on returning to growth. The entire team is focused on moving Cisco forward aggressively and we remain confident in our long-term goal to be the #1 IT company.

For the current quarter, Wall Street expects Cisco to close out the fiscal year with earnings of 51 cents per share on a revenue of $11.77 billion.

Cisco is expected to provide fiscal Q4 2014 guidance during the shareholders conference call at 1:30PM PT/4:30PM ET.

UPDATED: Cisco projected revenue will drop between 3 percent to 1 percent, year-over-year, versus analyst consensus pegging a drop by as much as six percent.

Touting this contrast as a win for Cisco, Chambers posited during the call that Cisco is "leading the transition to software-defined networking" along with trumping competition in the datacenter market over the likes of IBM, Hewlett-Packard, and Dell.

Here are more highlights from Cisco's Q3:

  • Unveiled plans for its Intercloud for the Internet of Everything (IoE), a distributed network and security architecture for high-value application workloads, providing real-time analytics and promising "near infinite" scalability -- all tailored to conform to local data sovereignty laws.
  • Introduced Managed Threat Defense, a managed security service based upon predictive analytics in real-time for detecting and protecting against attacks across customer networks
  • Teamed with AT&T, GE, IBM and Intel to establish the Industrial Internet Consortium, an open membership group focused on breaking down barriers of technology silos while opening access to big data
  • While propagating the concept of "fog computing," Cisco IOx debuted as an architecture enabling routers and switches with computational abilities for the purpose of managing massive amounts of unstructured information pouring out of connected data points.
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