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November 14, 2012

Cost cuts boost Cisco’s first quarter profit and revenue

Profit was propelled by investments from large US businesses towards big-ticket networking gear

By CBR Staff Writer

Networking equipment manufacturer Cisco reported 18% rise in its profit during the its first quarter ended 27 October 2012 to $2.1bn, on the back of rise in sales following cost cutting measures, shutting businesses and reducing prices.

The profit was propelled by investments from large US businesses on big-ticket networking gear, whilst the federal government continued to delay.

The firm reported net sales of about $11.9bn, up 6% over the corresponding quarter in 2011.

Cisco chairman and chief executive officer John Chambers said the firm delivered record results this quarter with revenue growth of 6%and strong earnings per share growth.

"Our innovation engine, operational discipline and on-going evolution are enabling us to differentiate in the market," Chambers said.

The firm also revealed that there were some signs of enhancements in the US market, while alerting that circumstances in Europe were uncertain.

Experiencing reduced demand and rise in competition, Cisco deployed several measures to cut costs and maintain its profitability by implementing restructuring programme aimed at reducing expenditures by nearly $1bn.

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During the period, sales of Cisco’s main products including routers and switches, were weak, while sales of its upcoming product range including wireless network equipment and servers for data centres increased rapidly.

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