A big accounting charge ate into profits at Cisco Systems, leading the bellwether maker of internet networking equipment to miss Wall Street’s expectations for the first quarter in spite of improving sales.

Management remained upbeat, however, as profits excluding an accounting charge related to the expensing of stock options beat most analysts’ estimates by a penny.

John Chambers, Cisco’s president and chief executive, hailed what he called a “solid quarter”, pointing to double-digit growth in orders and revenues in the US and Asia, which overcame weakness in Europe and Japan.

Cisco said it was on track to continue its strategy of investing in new technologies that integrate its routing equipment with more advanced services such as network security and internet communications systems.

Looking ahead, Mr Chambers said the company expected revenues to grow between 8 and 9 per cent in the second quarter, and between 10 per cent and 12 per cent for the full year.

Shares in Cisco, which eased 0.6 per cent yesterday in New York, continued their slide in after-hours trading, falling 2.3 per cent to $17.34.

Net profit fell to $1.3bn in the first fiscal quarter, down from $1.4bn a year
ago as the company swallowed a $228m charge related to the expensing of stock options.

The company earned 20 cents a share, down from 21 cents a share in the first quarter last year and below most analysts expectations of 24 cents a share.

Excluding the charge, earnings per share were 25 cents, slightly ahead of estimates. Cisco said the impact of options expensing could trim between 12 cents and 16 cents a share from its bottom line this year.

Cisco said it planned to roll out two new technologies before the end of the year, part of a plan to focus on advanced technologies as it seeks to expand its business beyond data infrastructure and into other, more value-added activities.

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