Despite Higher Earnings, Cisco Shares Fall on Lower Margins


Cisco Systems's (CSCO) fiscal first-quarter profit increased 8% from a year earlier as the company boosted sales of its computer-networking gear to companies worldwide. Shares fell in extended trading after the company reported lower gross margins.

Net income for the quarter, which ended Oct. 30, was $1.93 billion, or 34 cents a share, up from $1.79 billion, or 30 cents, a year earlier. Excluding some items, profit was 42 cents a share. Revenue jumped 19% to $10.8 billion.

Cisco is one of several technology companies that are benefiting from what appears to be a steady rebound in business spending. The company beat analysts' forecasts of 40 cents a share on $10.7 billion in sales.

Still, shares fell after the company reported that its gross margin, or its revenue minus the cost of goods sold, fell to 63% of sales from 65% in the year-ago quarter. In after hours trading, the stock had fallen 12.6% to $21.40 as of 9 p.m. Eastern time Wednesday.

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