After its $4.1bn acquisition of Stratacom Inc, network switch supplier Cisco Systems Inc looks almost invincible in its position as the number one supplier of corporate networking equipment and its first quarter numbers show it is still very much the one to catch. Revenue was $1.43bn, up 80% on the same period last year; net income was down slightly at $180.9m after a one-time charge of $174.6m for writing down R&D costs associated with its Telebit Corp acquisition, and a gain of $55.1m on the sale of a minority stock holding. Earnings per share were $0.26. Excluding the charge and gain, net income would have been $320.8m, or $0.47 per share, just ahead of First Call’s $0.46 average of analysts’ estimates. Following its Stratacom, Granite Systems (for gigabit Ethernet), Nashoba Networks (token ring) and Telebit (ISDN modems) purchases – and pending acquisition of Netsys Technologies (for network modeling) – Cisco finds itself in the position of dominating two interlinked markets which are exploding. Routers are required not only as one of the essential building blocks of the internet, but also for building internal intranets. It is difficult to see any threat to Cisco at present. The internet and the intranet markets are both expected to show high growth rates for the next several years, with overall networking products expected to show between 30% and 50% a year growth. And while rivals such as Bay Networks and 3Com are growing fast, and in some areas have highly competitive products, they are not catching up. Cisco shares closed up $1.12 at $63.75 on the day but dropped back slightly in after hours trading following the release of its first quarter figures.
