Cisco posts higher profit and revenue in Q2

CEO Chambers sees a 'soft recovery' in the world economy

By , IDG News Service |  Networking, Cisco, John Chambers

Betting on mobile carrier networks has paid off for Cisco, which doubled its revenue from service-provider Wi-Fi in the quarter. Service-provider video revenue grew by 20%, and Chambers said Cisco was aiming that business at profitability, turning down sales of low-margin set-top boxes in favor of its Videoscape back-end delivery architecture.

Some other businesses, including the collaboration unit, saw orders flat or down. Switching revenue rose just 3% and routing was down 6%.

Business conditions seem to be improving in some parts of Europe, such as Germany and the U.K., but are still poor in Southern Europe, Chambers said. "You're going to see Southern Europe remain tough," Chambers said.

Cisco expects revenue in the current quarter to increase by between 4% and 6%. It forecast earnings per share, not including one-time items, of between $0.48 and $0.50 per share.

Cisco's orders in China were down by 4% in the quarter, reflecting ongoing pressures the company faces there, Chambers said. In November, he said opposition to Chinese networking giant Huawei in the U.S. government had affected Cisco's business in the country.

"While we believe the China decline may last for several quarters, we are committed to the China market," Chambers said on Wednesday. The company hopes to be competitive in Chinese LTE projects that are expected to start in the second half of this year. "We will earn the confidence of the Chinese people," Chambers said.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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