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Cisco Sales Surge 61 Percent

August 9, 2000

SAN JOSE, Calif. (AP) _ Shares of Cisco Systems Inc. rose nearly 6 percent in early trading Wednesday following a strong fourth-quarter earnings report that beat analysts’ expectations.

For the three months ended July 29, Cisco earned $796 million, or 11 cents per share, compared with $605 million, or 8 cents per share, in the year-ago period, the company said Tuesday.

Excluding one-time acquisition charges, payroll tax on stock option exercises and net gains on minority investments, Cisco earned $1.2 billion, or 16 cents per share, up from $710 million or 10 cents per share, in its fiscal 1999 fourth quarter.

Analysts surveyed by First Call/Thomson Financial were expecting the San Jose-based company to earn 15 cents per share. The per-share figures reflect the 2-for-1 stock split on March 22.

Fourth-quarter revenue was $5.72 billion, up 61 percent from $3.56 billion in the year-ago period.

Shares of Cisco rose $2.313, or 4 percent, to $67.813 Wednesday on the Nasdaq Stock Market.

Cisco has emerged as one of the most stable technology companies in the nation _ making it one the most valuable companies in the world _ because of soaring demand for its switches, routers and fiber-optic equipment. They are used to direct communications traffic for both corporate computer networks and the broader, public networks run by telecommunications companies and Internet service providers.

``The second Industrial Revolution is just beginning, and businesses and governments are turning to Cisco, the Internet expert, to assist them in transforming their companies and countries,″ said company chief executive John Chambers.

Cisco has developed a strategy of buying companies in developing markets and using its giant status to augment their technology and engineering expertise.

Despite that much-applauded formula, company executives are persistently cautious in their outlook, warning last quarter that supply shortages of components such as flash memory might constrain growth.

Those challenges turned out to ``be every bit as challenging as we expected,″ Chambers said Tuesday in a conference call.

But many analysts brushed aside those warnings in recent weeks.

``This company is so strong in supply-chain management, if anyone knows how to deal with a shortage, it’s Cisco,″ said First Union Securities analyst Steve Koffler.

Chambers said during the call that the company expects to see orders to upgrade existing data networks surge in the next few months and last for at least five years as businesses seek to accomodate increasing demands.

Cisco also revealed that executive vice president Don Listwin, who headed the development of Internet technology and services for telecommunications companies, was leaving. Listwin is becoming chief executive and president of the new company formed by the merger of Software.com Inc. and Phone.com Inc., two Internet software companies that announced early Wednesday they are combining in a $6.4 billion stock deal.

For the year ended July 29, Cisco earned $2.67 billion, or 36 cents per share, compared with $2.02 billion, or 29 cents per share in the previous fiscal year. Sales jumped to $18.93 billion from $12.17 billion.

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