Expensing of Stock Options Cuts Cisco Systems’ Quarterly Profit

Cisco Systems Inc. on Wednesday posted a slightly lower fiscal first-quarter profit because of the cost of expensing stock options for the first time.

The San Jose-based maker of computer and telecommunications network equipment said net income for the period ended Oct. 29 was $1.3 billion, or 20 cents a share, compared with $1.4 billion, or 21 cents, a year earlier. Excluding the cost of expensing stock options and other items, Cisco said, profit rose to $1.6 billion, or 25 cents a share, topping consensus Wall Street estimates by a penny.

Cisco’s revenue rose 9.7% to $6.55 billion, slightly less than the average analyst estimate of $6.57 billion.

“I would summarize the quarter as a solid quarter,” Cisco Chief Executive John Chambers told industry analysts.

Cisco, the leading supplier of the computer routers and switches that direct Internet traffic, is exploring new businesses such as home networking, security and optical networks. It also is fighting smaller rival Juniper Networks Inc. for a bigger slice of the telecommunications carrier supply business.

Profit was dragged down by a $228-million charge for employee stock options -- just as Cisco and other high-tech companies predicted would happen when the Financial Accounting Standards Board proposed and adopted the rule.

Shares of Cisco fell 11 cents to $17.75. In extended trading, the stock rose 1.6% to $18.03.