Cisco Systems posted a 7.2 percent rise in quarterly profit on Wednesday as demand for network equipment from telephone companies was steady despite the slowing U.S. economy.
The results were in line with Wall Street expectations, and Cisco shares rose 1.2 percent as investors waited for company executives to give their outlook on a conference call.
"One of the key issues last quarter was weakness in U.S. and U.K. enterprise, so it's important to look for continued trends in that area as well as what they say about the economy," said Scott Neuendorff, research analyst with Hester Capital Management.
Cisco, which makes routers, or switches that direct traffic on data networks, said its profit for the second quarter ended January 25, was $2.1 billion, or 33 cents per share, compared with $1.9 billion, or 31 cents a share, in the year-ago quarter.
Earnings per share before unusual items were 38 cents, matching the average analyst forecast, according to Reuters Estimates.
Sales rose 16.5 percent to $9.8 billion, in line with expectations.
Eric Marshall, a portfolio manager at Hodges Funds, called the sales growth "pretty encouraging."
"January is usually the seasonally softest quarter for them. All in all, I'm encouraged by this, and I think our long-term thesis for Cisco as a global-growth story is well under way," he said.
Cisco is the world's top maker of network equipment. It derives much of its revenue from enterprises which buy its equipment to run office networks.
Cisco has been moving into new markets such as video conference and high-end video conference and also owns television set-top box maker Scientific Atlanta, areas that Chief Executive John Chambers said were paying off.
Moving into the second half of its fiscal year, Chambers said the San Jose, Calif.-based company was in good shape with a product pipeline that is well developed, and it's seeing balanced momentum across its core and advanced technology groups.
He also said in a statement that the just-reported quarter was marked by strong revenue and order growth, paced by a broad base of geographic regions, products, services, and customer markets.
Cisco shares have fallen about 28 percent since Chambers said in November that the company was seeing dramatic decreases in orders from U.S. banks.
Cisco shares closed down 18 cents at $23.08 on the Nasdaq on Wednesday. In after-hours trade, the stock rose to $23.84.
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