Cisco Systems, the biggest maker of computer-networking equipment, reported quarterly profit and sales that topped analysts' estimates as job cuts kept costs in check and price reductions attracted customers.
Profit excluding some costs was 47 cents a share in the period ended July 28, Cisco said in a statement yesterday.
Revenue rose 4.4 per cent to $11.7 billion, compared with analysts' prediction for $11.6 billion.
Chief executive officer John Chambers has cut 7,800 jobs, shut businesses and reduced prices to win business lost to Juniper Networks and Hewlett-Packard. and combat a slowdown in Europe, which makes up a fifth of sales.
Shares were buoyed after the company boosted its dividend by 75 per cent and forecast sales and profit that met expectations.
"Their growth is modest, so it's not clear when they can start accelerating some of the top-line growth," said Erik Suppiger, an analyst with JMP Securities LLC in San Francisco.
"But they're effectively keeping their profitability intact and taking some steps to return earnings back to shareholders."
Cisco rose 5 per cent to the equivalent of $18.33 in German trading at 9.33 am Frankfurt time.
It had gained 1.1 per cent to $17.35 at yesterday's close in New York.
The stock, which is down 4 per cent this year through yesterday, is inexpensive relative to Juniper Networks, at 9.5 times projected earnings for 2012, compared with 24 for Juniper.
Since new business generates 80 percent of quarterly sales, Cisco is seen as a bellwether for the broader technology industry.
The San Jose, California-based company is increasing its dividend to 14 cents a share, starting this quarter, from 8 cents a share.
Chief Financial Officer Frank Calderoni said yesterday Cisco would return at least half of cash generated from operations via dividends and share buybacks.
"Our financial strength gives us the confidence to commit and execute against this strategy, in order to provide meaningful return to our shareholders," he said in a statement.
Bloomberg
