Cisco Systems Inc, the world's largest maker of computer networking equipment, is seeing its ambitions cramped by the global economic turmoil, but results for its latest quarter were strong enough that it announced an increase to its dividend.
Cisco's sales in the latest quarter rose just 4.4 per cent from last year, as customers in Southern Europe were in the grips of a recession and government customers on both sides of the Atlantic held back.
Cisco's long-term goal is for annual growth of five per cent to seven per cent.
The results announced on Wednesday beat Wall Street's muted expectations, and Cisco raised its dividend by 75 per cent.
The new quarterly dividend of 14 US cents per share represents an annual yield of 3.2 per cent of Cisco's stock price, a relatively high yield for a technology company.
Cisco started paying a dividend in April 2011.
The dividend and the increase announced on Wednesday reflect Cisco's transition from an enterprise growing at internet speed to a mature one that's subject to the same cycles as major industrial manufacturers.
But the higher dividend doesn't necessarily mean Cisco will give shareholders more cash overall, as it has a buyback program as well and could reduce the pace of buybacks to free up cash for the dividend.
Cisco said it's committing to returning to shareholders at least 50 per cent of its free cash flow, or the cash it pulls in after expenses and capital investment.
In the fiscal year that just ended, it returned $US5.9 billion ($A5.64 billion) to shareholders in buybacks and dividend, which was already more than 50 per cent of free cash flow.
Analysts pressed Cisco executives on the issue, but got no clear answer.
During a conference call to discuss results, chief financial officer Frank Calderoni said Cisco would be "opportunistic" about the buybacks.
Cisco said it earned $US1.9 billion ($A1.82 billion), or 36 cents per share, in its fiscal fourth quarter, which spanned May to July. That's a 56 per cent increase from $US1.2 billion ($A1.15 billion), or 22 cents per share, in the same period a year ago.
For the full fiscal year, Cisco earned $US8.04 billion ($A7.68 billion), or $US1.49 ($A1.42) per share. That was up 24 per cent from $US6.49 billion ($A6.20 billion), or $US1.17 ($A1.12) per share, in fiscal 2011.
Revenue was $US46.1 billion ($A44.06 billion), up seven per cent from $US43.2 billion ($A41.29 billion) in the previous year.