Update: Cisco Beats Estimates by a Penny

Updated from 5:12 p.m. EDT

Cisco Systems(CSCO Quote) reported a 69% increase in its fourth fiscal quarter earnings Tuesday, beating Wall Street estimates, and sending shares of the computer network builder higher in after-hours trading.

The San Jose, Calif.-based company said its performance was a result of strong global demand for its products, causing revenues to rise 61%.

Cisco reported pro forma net income, excluding charges, of $1.2 billion, or 16 cents a diluted share, compared with $710 million, or 10 cents a diluted share in the fourth fiscal quarter of 1999. Those numbers beat the consensus of Wall Street analysts, who had anticipated income of 15 cents a share in the latest quarter, according to First Call/Thomson Financial.

In after-hours trading, Cisco gained 1 1/2, or 2.2%, to 67 3/4, according to Island ECN. The stock had ended the regular trading session down 3/4, or 1.13%, at 66 1/4.

Cicso's earnings performance came on top of hefty sales gains. Net sales rose 60%, to $5.72 billion, from $3.56 billion in the year-earlier period.

During the latest quarter, Cisco completed acquisitions of Atlantech Technologies, JetCell, PentaCom, Qeyton Systems and Seagull Semiconductor, for a total of $1.39 billion and took charges of $461 million, or about 6 cents a share in after tax acquisition-related charges.

Including those charges, net income totaled $796 million, or 11 cents a share, compared with $605 million, or 8 cents a share a year earlier.

Cisco said its performance was helped by what it terms an Internet-driven "second Industrial Revolution" that is just beginning.

In a conference call with analysts and investors, Cisco executives said they expect the company to continue to chalk up strong gains in revenue and income, despite what they see as growing competition in the marketplace, occasional shortages of semiconductor components.

But Larry Carter, Cisco's chief financial officer, said the company may continue to see an erosion of its gross margin as it continues to rapidly expand into lower-margin markets. In the fourth quarter, gross margin dipped to 64% from 64.3% in the third quarter.

Cisco also announced in the conference call that its executive vice president, Donald Listwin, has resigned to become chief executive of an unidentified company that has partnerships in place with Cisco. That company is expected to announce that appointment Wednesday.