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Growing data demand from businesses boosts Cisco, offsetting sequester cuts

Published This article is more than 2 years old.

The numbers: They were good. The networking products maker beat expectations with earnings per share of $0.51 and revenues totaling $12.2 billion. Its shares were up by almost 6% in after hours trading.

The takeaway: Cisco CEO John Chambers had said in February that the mandatory federal government budget cuts known as the sequester could hurt the company. But those cutbacks were offset by an increase in demand for Cisco’s products by businesses, which were sending more data across the internet. Corporate data use is rising as employees spend more time on phones and tablets, which lifts Cisco’s sales.

What’s interesting: Cisco is often lumped in with Hewlett-Packard and other older, struggling technology companies. But Cisco is actually changing with the times. Case in point: last year’s $5 billion acquisition of video content streaming and software security firm NDS Group. It also bought Ubiquisys, which allows wireless carriers to improve their service on mobile phones and tablets. The company has also shed older, non-core businesses like its Linksys router unit.

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