Chambers Bullish On IT Spending, IP Telephony Trends

On Cisco's third-quarter earnings call, Chambers said he sees growing optimism among CEOs that, barring bad external events, should loosen the purse strings for IT expenditures. "They're slowly starting to spend on IT investment," he said.

There were the usual caveats on the geopolitical situation and interest rates, but overall, Chambers said he is more optimistic now than he was going into the last quarter.

For its third quarter ending May 1, Cisco logged sales of $5.6 billion, up 21.7 percent from the $4.6 billion figure for the year-ago period.

On a GAAP basis, Cisco earned $1.2 billion, or 17 cents per share, up from $987 million, or 14 cents per share, for the third quarter last year. Using pro forma numbers, which exclude special items, the company logged income of $1.4 billion, or 19 cents per share, compared with $1.1 billion, or 15 cents per share, for the corresponding quarter last year.

The company expects its GAAP revenue to rise 3 percent to 5 percent for the fourth quarter, which would translate to 23 percent to 25 percent year-over-year growth. Gross margins are expected to grow from 67 percent to about 69 percent.

Chambers also highlighted what he called the company's accelerating success in IP telephony. That business was up a bit more than 20 percent sequentially and Cisco shipped its 3 millionth phone in the third quarter.

It took the company about 30 months to sell its first million IP phones, 13 months to sell its second million and just eight months to sell the third million, he told analysts and reporters on a teleconference, which was sometimes marred by malfunctions during the question-and-answer session. Each time an analyst could not be heard, Chambers volunteered a deal on a Cisco IP phone.

In a further sign of faith in the continued recovery, Cisco plans to add 1,000 new jobs over the rest of the calendar year. Most will be allocated to engineering and sales and most will be in the United States, Chambers said. The company added 200 positions during the past quarter, bringing total employment to just more than 34,300 worldwide.