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Cisco Beats Estimates on Strong Demand for Security Products

May 18, 2016, 9:25 PM UTC
Cisco Announces Quarterly Earnings
SAN JOSE, CA - AUGUST 10: A sign is posted in front of the Cisco Systems headquarters on August 10, 2011 in San Jose, California. Cisco Systems reported better-than-expected fourth quarter revenues with a 3.3 percent rise to $11.2 billion as the company continues to scale down its business. (Photo by Justin Sullivan/Getty Images)
Photograph by Justin Sullivan — Getty Images

Network equipment maker Cisco Systems reported a bigger-than-expected quarterly profit, driven partly by strong demand for its security products.

The company’s shares rose 5.1% in after-market trading on Wednesday.

Cisco (CSCO) also gave an upbeat forecast for the current quarter — it expects an adjusted profit of 59-61 cents per share and revenue to range from flat to up 3%.

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Analysts on average had expected a profit of 58 cents and revenue of $12.42 billion for the fourth quarter, according to Thomson Reuters I/B/E/S.

Revenue in Cisco’s security business, which offers firewall protection as well as intrusion detection and prevention systems, rose 17% due to strong sales of its SourceFire products.

Cisco has been beefing up its wireless security businesses to offset the impact of sluggish spending by telecom carriers on its main business of making network switches and routers.

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Revenue in Cisco’s data center business rose 1% in the third quarter.

Revenue in the company’s traditional routers business fell 5%, while switching unit revenue was down 3%.

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

The company’s net profit fell to $2.35 billion, or 46 cents per share, in the third quarter ended April 30, from $2.44 billion, or 47 cents per share, a year earlier.

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Excluding items, the company earned 57 cents per share.

Analysts on average had expected a profit of 55 cents per share and revenue of $11.97 billion, according to Thomson Reuters I/B/E/S.

Revenue fell to $12.00 billion from $12.14 billion.