Cisco Systems profit beats Street

Profit for fiscal third quarter ended April 27 grew to $2.5 billion from $2.17 billion in the year-ago quarter

Cisco Systems Inc posted a higher than expected quarterly profit, suggesting that the network equipment maker's customers are spending more on technology.

Cisco shares rose about 5% after Chief Executive John Chambers said in a statement that the company was seeing good signs in a "slow, but steady economic environment."

"We are starting to see some good signs in the US and other parts of the world which are encouraging," Chambers said.

Profit for the fiscal third quarter ended on April 27 grew to $2.5 billion, or 46 cents per share, from $2.17 billion, or 40 cents per share, in the year-ago quarter.

Excluding unusual items, earnings per share came in at 51 cents compared with Wall Street expectations for 49 cents according to Thomson Reuters I/B/E/S.

Recent weak results from companies including Juniper Networks and International Business Machines Corp made investors worry that Cisco would follow suit, due to sluggish spending by customers such as the US government.

RBC Capital markets analyst Mark Sue said that Cisco's better than expected revenue showed that they are executing well to make the most out of a weak economic environment.

"They seem to be bucking the trend and that's encouraging, said Sue.

Mark McKechnie, an analyst at Evercore was impressed with Cisco's gross margin of 63%, above the company's target of 61 to 62%.

"It will be interesting to see if they can raise the guidance on margins, McKechnie said.

Revenue rose more than 5% to $12.2 billion from $11.6 billion and compared with Wall Street expectations for $12.18 billion according to Thomson Reuters I/B/E/S.

Cisco shares rose to $22.27 in extended trading after closing at $21.21 on Nasdaq.