Cisco: Surging Q3 Highlighted By 63 Percent Profit Gain

"What a difference a year makes," Chambers said on the company's third quarter earnings conference call.

Cisco made only glancing reference, however, to the supply chain shortages that some Cisco partners say the company didn't adequately address while they were happening in the past year. According to Chambers, Cisco made "major improvements" in its order lead time over the third quarter and expects to be in the "desired range" for lead times in Q4, "assuming no major surprises."

"The supply chain for the industry still has some challenges," Chambers said.

For the quarter ended May 1, Cisco reported profit of $2.19 billion at 37 cents per share, up 63 percent from $1.35 billion at 23 cents per share in the same quarter a year ago. Excluding one-time charges, earnings were up to 42 cents per share from 30 cents per share.

Overall, revenue increases by 27 percent to $10.4 billion from $8.2 billion in the the year-before quarter. Cisco had previously projected revenue growth between 23 and 26 percent for the quarter, or about $10 billion to $10.3 billion. The number was also higher than the 25 percent revenue growth Wall Street predicted.

Gross margin was the only less-than-bright spot of overall earnings, shrinking slightly to 63.9 percent from 64.1 percent for the quarter a year ago.

Chambers described the third quarter as having finally returned Cisco to the type of growth it was experiencing before the global downturn began. He described that growth as a proof point for Cisco's strategy, which according to Chambers meant market share gains, wallet share gains from customers, and an innovation and operations engine "hitting on all cylinders."

Most geographies and product segments were up, year-over-year, in quarterly revenues from a year ago. The European theater, which was cause for concern for many Cisco analysts heading into the earnings report, grew 30 percent year-over-year for the quarter, though Chambers admitted growth would probably be slower there than in other theaters.

PAGE 2: UCS And TP Take Off Chambers made special note of Cisco's Unified Computing System (UCS), the company's data center offering, saying that sequentially, UCS sales had grown 168 percent and orders had grown 83 percent.

UCS customers were about 370 at the end of the second quarter, he said, and now UCS boasts more than 900 customers. Most customer wins, Chambers noted, were against "incumbent" data center players.

Among growth areas by theater, the U.S. theater grew 34 percent year over year, he added. Overall product revenue grew 31 percent by revenue year over year, orders grew by 34 percent year over year, and services grew by 11 percent year over year.

Chambers said Cisco was moving to take advantage of growth in collaboration, virtualization and video.

Both of the major acquisitions Cisco recently completed -- of Starent Networks and Tandberg -- are off to a great start, he said. The combination of Cisco's existing TelePresence portfolio with the Tandberg portfolio it's acquired is expected to see revenue growth of 25 to 28 percent over the next fiscal year.

Chambers also reiterated previous comments that Cisco would add head count by as much as 2,000 employees over the next few quarters. Cisco added about 1,000 employees in the third quarter through its acquisitions, he said.

Chambers preached commitment to embracing market trends and aligning its growth to be at the forefront of the "next Internet." Similar to what Cisco did in the early 1990s, Chambers said, that embrace will power Cisco's growth for the next decade.