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Cisco hikes dividend as profit beats forecasts

Cisco headquarters in San Jose, Calif.

Paul Sakuma

Network equipment maker Cisco Systems Inc. said second-quarter earnings and revenue beat average estimates, leading it to increase its dividend.

Revenue rose 10.6 per cent from the year-ago quarter to $11.5-billion (U.S.). Analysts on average were expecting $11.23-billion.

Net income grew to $2.2-billion, or 40 cents per share, from $1.5-billion, or $27 per share, a year earlier.

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Excluding items, earnings were 47 cents per share, beating the average estimate of 43 cents a share, as compiled by Thomson Reuters I/B/E/S.

Cisco said on Wednesday it plans to pay a quarterly dividend of $0.08 per common share, up 2 cents from the previous quarter.

"Our operational focus continues to yield positive results – we hit our billion dollar expense reduction a quarter early," chief executive John Chambers said in a statement on Wednesday.

Cisco, a sector bellwether because of its global scale and diverse client base, last year scaled back on consumer businesses and laid off thousands in a sweeping four-month overhaul, aiming to cut expenses by $1-billion.

"It's a nice upside surprise," Joanna Makris, analyst at Mizuho Securities, said.

"Broadly speaking, people expected a good quarter. This is probably a little better than expected and the dividend is an added surprise," she added.

Cisco's core business is routers and switches, which direct Internet traffic, but the company has also focused on data centers, enabling and providing cloud computing technology and video platforms.

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