Cisco surpasses profit estimates, security unit surges

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Cisco surpasses profit estimates, security unit surges

Network equipment maker Cisco Systems reported a bigger-than-expected quarterly profit, helped by higher demand for its routers and security products, and added US$15 billion (AU$21 billion) to its share buyback program.

The company's shares rose 5.1 percent in after-market trading on Wednesday US time.

The results were a bright sign for investors after several tech stocks with lofty valuations plunged in the past few days due to disappointing sales outlooks from LinkedIn and Tableau Software.

Cisco is shifting to high-end switches and routers and investing in new products such as data analytics software and cloud-based tools for data centers.

Revenue in the company's routers business rose 5 percent to US$1.85 billion in the second quarter ended 23 January, Cisco said.

Revenue in the switches business, the company's biggest, fell 4 percent to US$3.48 billion.

Its security business, which offers firewall protection as well as intrusion detection and prevention systems, recorded an 11 percent rise in revenue to US$462 million.

Cisco boosted its current share buyback plan of US$97 billion, of which US$16.9 billion was remaining, by US$15 billion.

The company forecast third-quarter adjusted profit of 54-56 US cents per share and revenue growth of 1-4 percent, excluding revenue from its customer premises equipment business, which it has sold.

Analysts on average expect a third-quarter profit of 55 US cents per share and revenue of US$12.02 billion.

Net income rose to US$3.1 billion, or 62 US cents per share, from US$2.40 billion, or 46 US cents per share, a year earlier.

Excluding items, the company earned 57 US cents per share, beating the average analyst estimate of 54 US cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 2 percent to US$11.8 billion, excluding revenue from the customer premises equipment portion of the service provider video connected devices business that was divested.

(Reporting by Kshitiz Goliya and Abhirup Roy in Bengaluru; Editing by Saumyadeb Chakrabarty)

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