Wall Street inspired as Cisco posts £1bn net profit

Networking equipment behemoth Cisco enjoyed a strong showing in its most recent fiscal quarter, increasing net profit by 18 per cent year-on-year to the tune of over £1 billion.

Combining increased sales with cost cutting measures - the firm has shuttered more than 10,000 jobs since last year - Cisco managed to boost its bottom line well above the 6 per cent growth in overall revenue it enjoyed in the three months ended 27 October, 2012.

On the back of the good news, Cisco saw its share price rise by more than 6.5 per cent on the NASDAQ yesterday, reaching a high of over $18, before closing on $17.66. It's a steady improvement for the company, who has recently been hovering below the $17 mark following a slump of 10 per cent since mid-October and is now better positioned to meet its median yearly price target of $22.

Consequently, analysts are increasingly bullish about the firm's prospects, with more than 60 per cent of covering Wall Street brokers now rating it as a buy candidate. Cisco's strong recent performance is regarded as especially impressive given the woeful state of a number of key economic territories, particularly Europe, and some pundits have gone as far as to say the company in its current state represents a "rare investor opportunity."

"Given [the] concern about enterprise spending, the company seems to be bucking the trends," said Bill Kreher, senior technology analyst at Edward Jones.

"The bar was low but the company did exceed those expectations," he added.

However, some commentators are remaining more cautious.

"It doesn't sound like the upside is likely to sustain," said Erik Suppiger of JMP Securities, who rates the firm's stock as neutral.

Cisco's results are also particularly encouraging in light of recent underwhelming quarterly showings by a number of its rivals - Intel was recently forced to cut its Q3 2012 sales forecast by around £1 billion, while IBM also posted a generally below-par performance.