The company took a $228 million charge because of new rules on how companies must report their stock options. Cisco and other companies in the technology industry had fought to keep those rules from taking effect.
San Jose, California-based Cisco is the top supplier to businesses of the routers and switches that direct Internet traffic. It also is exploring new technologies, such as home networking, security and optical networks as it fights smaller rival Juniper Networks Inc and others for a bigger slice of the telecommunications carrier supply business.
Despite what Cisco executives called a solid quarter, Cisco nevertheless said it expects the next quarter's sales to rise between 8 percent and 9 percent, falling short of analysts' expectations for an 11 percent increase to more than $6.7 billion.
The company's net income for the fiscal first quarter of 2006 ended October 29 was $1.3 billion, or 20 cents per share, compared with $1.4 billion, or 21 cents a share, in the same quarter a year ago.
Excluding options and some smaller charges, Cisco's first-quarter profit rose to $1.6 billion, or 25 cents a share, beating Wall Street estimates by a penny.
Sales rose 9.7 percent to $6.55 billion, slightly below the average analyst estimate for sales of $6.57 billion. The company posted strong sales in the United States and the Asia-Pacific region, but cited weakness in some of Europe's larger markets, including France, Germany and the UK.
"What we want to watch is whether this is a short-term bump or not," Cisco Chief Executive John Chambers told Reuters. "We would rather watch it for another quarter (and) see if it was a blip."