This story has been updated with information on conference call comments, business segment information and share price.
NEW YORK (TheStreet) - Cisco (CSCO - Get Report) beat Wall Street's top and bottom line estimates in its second-quarter results, released after market close, and hiked its quarterly dividend to 19 cents a share.
The San Jose, Calif.-based firm reported revenue of $11.2 billion, down from $12.1 billion in the prior year's quarter, but above analysts' estimate of $11.03 billion.
Excluding items, Cisco earned 47 cents a share on net income of $2.5 billion, down from 51 cents a share and net income of $2.7 billion in the same period last year. Analysts surveyed by Thomson Reuters were looking for earnings of 46 cents a share.
"We delivered the results we expected this quarter. I'm pleased with the progress we've made managing through the technology transitions of cloud, mobile, security and video," said Cisco CEO John Chambers, in the company's statement. "Our financials are strong and our strategy is solid."Cisco's cash flows from operations were $2.9 billion during the quarter, up from $2.6 billion in the first quarter, but down from $3.3 billion in the same period last year. The company's non-GAAP gross margin was 61.3%.
Cisco's switching revenue declined 12% year over year to $3.27 billion, while Next-Generation Routing (NGN) was down 11% to $1.74 billion. The company's service revenue, however, increased 3% year over year to $2.73 billion, while security sales grew 17% to $393 million. The networking giant's board also approved a two cent-increase in the firm's quarterly dividend, hiking it from 17 cents a share to 19 cents a share. "We had a record quarter of returning $4.9 billion to our shareholders through our quarterly dividend of approximately $900 million and share repurchases of $4.0 billion," said Cisco CFO Frank Calderoni, in the company's statement. "Our financial strength gives us the confidence to provide a meaningful return to our shareholders, and I'm pleased we are increasing our quarterly dividend by 12 percent to $0.19 per share." Cisco shares slipped 3.85% to $21.97 in extended trading.
Speaking during a conference call to discuss the results, Cisco CEO John Chambers acknowledged that many of the issues that weighed on the firm's first-quarter results still pose a challenge.
"We saw the impact of emerging markets, service provider & high-end product transitions as we discussed last quarter," he said. "The emerging countries were better this quarter than last quarter, but way too early to call a trend."
For its fiscal third quarter, Cisco predicted a year-over-year revenue decline of 6% to 8%, although Chambers noted that this was an improvement on the firm's second-quarter guidance, which forecast an 8% to 10% fall in sales compared to the prior year's quarter. "We will return to positive growth one quarter at a time," he said.
--Written by James Rogers in New York. Follow @jamesjrogers >Contact by Email.
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