A surge in demand for bandwidth-hogging internet video services gave Cisco Systems a shot in the arm on Wednesday as the world's biggest maker of data networking equipment reported a 27 per cent jump in quarterly profit.
John Chambers, chief executive, hailed the results. He said Cisco was "in the midst of a market inflection that is changing the landscape of networking" as the internet emerges as thepreferred platform for the delivery of voice, video and data services.
Cisco has been racing to position itself as a leading provider of network infrastructure for services that combine voice, video and data into a single service inside companies and in the home.
"We laid the cornerstones of our strategy to capture this shift several years ago and believe we are now uniquely positioned for continued growth and increased share of our customers' IT spend," said Mr Chambers. He said that a pick-up in purchases by data service providers grappling with rising demand for video services had contributed to the jump in sales in the quarter.
"There is no doubt that video is the killer application here in terms of load," he said. "It is an art, not a science, to make video work well. More and more people are looking to Cisco to be their partner to make that happen."
Shares in Cisco jumped 4.9 per cent in after-hours trading. Its shares, which had risen from a low of $17.12 in January, rose 1 per cent on Wednesday to $25.10 ahead of the announcement.
Cisco reported net earnings of $1.6bn, or 26 cents a share, compared with $1.3bn, or 20 cents a share, a year earlier.
Revenues were $8.2bn, up from $6.5bn last year. Scientific Atlanta, a set-top cable box maker that Cisco bought last year for $6.9bn, added $584m to the company's top line in the period.
Both revenues and profit beat Wall Street expectations. Looking ahead, Cisco said it expected revenues to grow between 24 and 25 per cent in the coming quarter.
The results marked the latest advance for Cisco, which is transforming itself from a maker of routers and switches into a provider of services that help move content over computer networks.
