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Cisco Delivers an Encouraging Outlook; Shares Surge

Cisco Systems beat expectations with its fiscal fourth-quarter results and delivered an encouraging outlook, sending its shares higher in after-hours trading.

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AP

In a conference call following the earnings report, CEO John Chambers said the company sees a gradual improvement in the fiscal first quarter despite the fact that the environment for tech spending remains challenging. Growth in Asia and emerging markets is the strongest, he said.

Shares of Cisco fell 2.3 percent in regular trading Wednesday but rebounded more than 7 percent in after-hours trading. Click here for the latest after-hour quote here.

The networking-gear maker reported its earnings excluding items rose to 40 cents a share in its fiscal fourth quarter from 43 cents a share a year earlier.

Revenue increased to $11.2 billion from $10.8 billion a year ago.

Analysts had expected earnings of 38 cents a share on revenue of $10.96 billion, according to Thomson Reuters.

Cisco has warned since last year that government spending cuts would include network equipment, and a deal last week to reduce the U.S. federal budget deficit could hurt the San Jose, Calif., company's business more.

Investor sentiment also worsened after rivals Juniper Networks and Brocade Communicationsslashed outlooks in recent weeks as the economic picture darkened, slamming their shares.

Cisco, which depends on government spending for about a fifth of its revenue, said in July it would cut 15 percent of its workforce and sell a set-top box factory in Mexico as part of an effort to slash annual expenses by $1 billion.