Cisco (CSCO.O), the network equipment maker, reported quarterly results that topped Wall Street views on Wednesday, and its chief executive said there were signs of improvements in its business in Europe.
"We are seeing early signs of stabilization in government spending and also in probably a little bit over two thirds of Europe," John Chambers, the CEO, told analysts on a conference call after results were announced.
"But I want to watch that for at least another quarter before I get really excited about it," he added.
Chambers comments on economic development are generally watched closely because Cisco is considered a sector bellwether due to its global scale and diverse client base.
Cisco's shares lost 2.4 percent in after-hours trading to $20.63.
For its fiscal second quarter that ended January 26, Cisco reported revenue rose 5 percent to $12.1 billion versus a year ago. Analysts, on average, were expecting $12.06 billion, as compiled by Thomson Reuters I/B/E/S.
Income, excluding items, rose 6.2 percent to $2.7 billion, or 51 cents per share, 3 cents above analysts' average estimate of 48 cents a share.
The company said it expects revenue in its fiscal third quarter, which runs until the end of April, to grow 4 percent to percent compared with a year ago.
It forecast earnings per share, excluding items, in a range of 48-50 cents, in line with average analyst expectations of 49 cents.
With analysts expecting that Cisco would top their forecasts, Shaw Wu, an analyst at Sterne Agee, said, "It's pretty much going to boil down to guidance now."
"They did say they got a benefit from taxes," he said of the second-quarter result. "When you (take) that out it's 50 cents. That still beat by 2 cents." (Reporting By Nicola Leske; Additional reporting by Sinead Carew; Editing by Tim Dobbyn and Leslie Adler)