Cisco’s quarterly profits rise 44 per cent

Networking specialist Cisco has reported a $900m (£579m) year on year rise on its second quarter profits – a 44 per cent increase.

The firm reported net sales of $12.1bn in its second quarter, which is a rise of five per cent from the same quarter last year when it recorded sales of $11.5bn.

Its net income for the quarter, which includes the three months to the end of January, came in at £3.1bn compared with the $2.2bn it had accounted for in 2012. This amounts to about $0.59 per share, up from $0.40 in the corresponding quarter last year.

Income and earnings per share for the second quarter of fiscal 2013 included total tax benefits of nearly $927m or $0.17 per share. This was in relation to a tax settlement with the US Internal Revenue Service and the reinstatement of a federal research and development (R&D) tax credit.

These tax benefits were instrumental in assisting the healthy figures, but sales of equipment and software, particularly in the US, were strong too.

Cisco's chairman and CEO John Chambers said that the company had delivered record revenue for the eighth quarter in a row despite a challenging economic environment. He owed this to what he believes is the company's leadership and consistency.

Chambers believes that Cisco is progressing in its ambitious plans to become the top IT business worldwide.

"We are making solid progress towards our goal of becoming the number one IT company in the world," he said. "As new markets grow and are created, such as the internet of everything, it's very easy to see how the intelligent network is at the centre of that future."

Cisco has been on the acquisition trail in the last few years with several big purchases. In November last year it acquired privately held Meraki for $1.2bn. Most recently it acquired Israeli start-up Intucell for about $475m (£300m).

Other notable acquisitions include that of Cloupia, a company that automates converged data centre infrastructure, and Cariden Technologies – a supplier of network and traffic management solutions.

There have been divestments, too. Last month Cisco announced its intention to sell off its Linksys product line to Belkin. In July it said it would cut 1,300 of its workforce as part of its restructuring plans.

At the time Karen Tillman, vice-president of corporate communications at Cisco, said: "We routinely review our business to determine where we need to align investment based on growth opportunities. Additionally, we continue to evaluate our organisational structure as part of our plan to drive simplicity, speed of decisions and agility across Cisco.

"As we focus on both of these efforts, we are performing a focused set of limited restructurings that will collectively impact approximately two per cent of our global employee population. These actions, subject to local legal requirements, including consultation where required, are part of a continuous process of simplifying the company, as well as assessing the economic environment in certain parts of the world."