Cisco Systems Inc. reported net sales of US$9.8 billion for the quarter ending Jan. 23, an increase of 8 per cent over the same period a year ago. That gave it a profit of US$1.9 billion for the period. “Our outstanding Q2 results exceeded our expectations and we believe they provide a clear indication that we are entering the second phase of the economic recovery,” said CEO John Chambers in a news release. “During the quarter we saw dramatic across the board acceleration and sequential improvement in our business in almost all areas.”

“We are confident that our aggressive strategy of investing in the business during the downturn and our focus on innovation, operational excellence, and productivity are driving our momentum and growth in the market. We believe that we are extremely well-positioned by geography, in our customer segments, and in our key product categories as economies around the world continue to improve and our customers increase their technology investments.”

Net sales for the first six months of fiscal 2010 were US$18.8 billion, compared with US$19.4 billion for the first six months of fiscal 2009. Net income for the first six months of fiscal 2010, on a GAAP basis, was US$3.6 billion or $0.62 per share, compared with US$3.7 billion or $0.63 per share for the first six months of fiscal 2009. Non-GAAP net income for the first six months of fiscal 2010 was US$4.5 billion or $0.76 per share, compared with US$4.4 billion or $0.74 per share for the first six months of fiscal 2009.

During the quarter Cisco completed its purchase of ScanSafe, Inc., a maker of software-as-a-service (SaaS) Web security solutions and its acquisition of Starent Networks, Corp., a supplier of IP-based mobile infrastructure solutions targeting mobile and converged carriers.

In a report posted Thursday morning, National Bank Financial analyst Kris Thompson noted that Cisco added just over 2,100 employees in the quarter (about half from acquisitions) and expects to add another 2,000 to 3,000 over the next several quarters. “Headcount growth is certainly a positive indication that Cisco expects a renewed spending cycle to be more than just a short-term inventory replenishment,” he wrote.

Cisco's switches and routers segments (which account for about half it its of total revenues) finally posted year over year revenue growth as service providers and enterprises recommenced spending on their communications networks, the report said. Customer demand for broadband services ignored the economic downturn asvideo and multi-media rich devices continued to proliferate resulting in networks running too close to capacity.