Data Center, Cloud Lead the Way for Cisco Profitability

By Craig Galbraith Comments
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**Editor's Note: Click here for a look back to see how some of the biggest names in communications fared in Q3 2012.**

The Americas and Asia are strong, but Europe is holding Cisco back a bit.

The equipment giant released its quarterly earnings report on Wednesday, which revealed that revenue was up 5 percent in the company's fiscal second quarter – ending Jan. 26 – when compared to the year-ago quarter, for a total of $12.1 billion. That slightly beat analysts' estimates, Reuters noted. Income was up 6.2 percent to $2.7 billion.

Europe, however, accounts for about one-quarter of Cisco's business, the company said on its earnings call, and revenue dropped 5 percent on the continent. The Americas and Asia-Pacific were up 9 percent and 8.3 percent, respectively, to account for the overall rise.

"We are seeing early signs of stabilization in government spending and also in probably a little bit over two thirds of Europe," John Chambers, Cisco CEO, said on the call, "but I want to watch that for at least another quarter before I get really excited about it."

Even though routers and switches are at the core of the company's business, data-center and cloud-computing equipment led the way to profitability, Cisco said. Mobility, wireless infrastructure and service-provider video also contributed to the success. The data-center business was up a staggering 65 percent year over year.

Despite the mostly good news, Cisco stock opened the day about 2 percent lower on Thursday, but has since regained about half of that as of 12:46 p.m. ET.

Follow senior online managing editor @Craig_Galbraith on Twitter.

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