Shares in Cisco Systems Inc (NASDAQ:CSCO) zipped higher on Thursday after the network gear maker reported its first rise in quarterly profit in more than two years.
Sluggish demand in its traditional switches and routers business from telecom carriers in recent years has almost forced it to move towards becoming a software and subscription-focused business.
“We are clearly seeing the results of the strategy we’ve articulated over the last 10 quarters,” chief executive Chuck Robbins said on a post-earnings call.
Cisco recorded a net loss of US$8.8bn, or US$1.78 per share, in its second quarter ended January 27, compared with a profit of US$2.3bn, or 47 cents a share, a year earlier.
Once a hefty US$11.1bn charge related to the new US tax laws was stripped out, the group earned 63 cents a share, ahead of expectations of 59 cents.
Revenues for the quarter rose 2.7% to US$11.9bn, which was also better than the US$11.8bn Wall Street number crunchers had pencilled in.
Cisco has been snapping up businesses left, right and centre as part of its transition, and its acquisition of software maker Broadsoft closed earlier this month.
The company expects that to boost its third-quarter numbers and is forecasting for adjusted earnings of between 64 and 66 cents per shares - slightly ahead of average analyst estimate of 63 cents.
In the current quarter, Cisco added that it plans to bring US$67bn of funds held overseas by taking advantage of the recent reforms to US tax laws.
Cisco shares jumped 7.6% to US$45.30 in premarket trading on Thursday.