CORRECTED: Cisco profit beats on strength in security business

Cisco Systems Inc reported a better-than-expected quarterly profit on Wednesday, driven by gains from its newer businesses such as security, which more than offset the declines in its traditional switches and routers business.

The world`s largest network gear maker forecast second-quarter adjusted profit of 58 cents to 60 cents per share, largely above analysts` estimate of 58 cents, according to Thomson Reuters I/B/E/S.

The company`s shares rose nearly 3.8 percent to $35.40 in after-hours trading.

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"Cisco has been shifting its business model towards subscriptions, especially in the faster-growing segments like security," said Tim Green, analyst with the Motley Fool. "That effort may be starting to bear fruit."

Revenue from Cisco`s security business, which offers firewall protection and breach detection systems, rose 8 percent to $585 million.

Cisco has shifted its focus to newer high-growth areas such as security, Internet of Things and cloud computing like other legacy technology companies.

Net income rose to $2.39 billion, or 48 cents per share, in the first quarter ended Oct. 28, from $2.32 billion, or 46 cents per share, a year earlier.

Cisco forecast a revenue increase of 1 to 3 percent for its second quarter, which would end a streak of eight quarters of year-to-year decline.

"The forecast is better than feared and speaks to a company that has started to turn the corner," said Daniel Ives at research firm GBH Insights.

Excluding items, the company earned 61 cents per share. Revenue fell 1.7 percent to $12.14 billion.

Analysts on average had expected a profit of 60 cents per share on revenue of $12.11 billion.

(In eighth paragraph, fixes corrects to say eight quarters of year-to-year decline from four.)

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)