Aug. 5 (Bloomberg) -- Cisco Systems Inc. said profit rose 4.4 percent and gave forecasts for the next six months in line with analysts' estimates, suggesting sales are holding up even in the face of an economic slump. The stock rose 7 percent.

Fourth-quarter net income advanced to $2.01 billion, or 33 cents a share, Cisco, the world's biggest maker of networking devices, said today. Revenue climbed 9.9 percent to $10.36 billion. Analysts in a Bloomberg survey predicted $10.3 billion.

The report reassured investors that Chief Executive Officer John Chambers can boost revenue even as companies trim their information-technology budgets. Orders from large corporations increased 13 percent, spurred by demand for equipment used in company data centers, outpacing a 5 percent increase in bookings from phone and cable-television companies.

``Given the weak economy, the results are very good,'' said Jerome Dodson, chief executive officer of Parnassus Investments in San Francisco. The firm oversees $1.5 billion, including Cisco shares. ``The stock should be trading at a higher price.''

Sales will rise about 8 percent in the fiscal first quarter, Cisco said, indicating revenue of about $10.3 billion. Analysts predicted $10.4 billion, according to a Bloomberg survey. In the second period, revenue will rise 8.5 percent. That would equal $10.7 billion, in line with the average prediction by analysts.

Cisco, based in San Jose, California, rose $1.59 to $24.24 in extended trading after closing at $22.65 in Nasdaq Stock Market trading. The stock has lost 16 percent this year.

Economic Challenges

Chambers, 58, said on a conference call that he expects ``economic challenges'' for ``a few quarters.'' He maintained a long-term forecast.

``Our comfort level in terms of long-term growth of 12 to 17 percent hasn't changed at all,'' Chambers said in a telephone interview. ``If you watch our history over the last 15 years, we've been very predictable on our forecast and direction.''

Cisco is forecasting sales for only the first half of the year instead of the whole period, CFO Frank Calderoni said. The company isn't comfortable predicting for the full year because of the current economic conditions, he said.

Excluding costs such as stock-based compensation, fourth- quarter profit was 40 cents a share, compared with the 39 cents estimated by analysts. Cisco reported profit of $1.93 billion, or 31 cents, a year earlier.

Technology Barometer

Investors consider Cisco to be a barometer for the technology industry because it dominates the market for routers and switches. Those devices help companies, cable providers and phone carriers manage their networks and Internet traffic.

Router sales rose 8 percent from a year earlier, while revenue from switches advanced 5 percent, Cisco said.

Overall product revenue rose 8.8 percent to $8.64 billion. Sales from services, which include consulting and support, gained 16 percent to $1.72 billion, Cisco said.

``Expectations are very low,'' Christopher Baggini, a fund manager at Aberdeen Asset Management Inc. in West Conshohocken, Pennsylvania, said in a Bloomberg Radio interview. ``Chambers had said just a month ago how most of their customers were discussing a rebound in 2009, certainly not in the second half of 2008.''

International Growth

Orders in the U.S. and Canada rose 7 percent from a year earlier, trailing the growth in international markets such as Japan and India. Bookings increased more than 30 percent in China and more than 40 percent in Mexico and Russia.

Last month, Google Inc. and Microsoft Corp. reported lower- than-anticipated profits, signaling that the slowing economy is curbing demand for computer-related products. Google CEO Eric Schmidt said the company was facing ``a more challenging economic environment'' for the first time.

Telephone and cable-television companies are following corporate clients in reducing budgets, Credit Suisse Group AG analyst Paul Silverstein in New York said in a July 16 report.

AT&T Inc., the largest U.S. phone company, said July 23 it will probably spend less to expand its high-speed wireless network and Internet-television service for the rest of 2008.

Cisco first rattled investors last November, when Chambers said he saw a ``dramatic'' drop in orders from customers in the automobile and financial industries.

``The market is clearly in transition,'' John Krause, an analyst at Thrivent Financial for Lutherans, said in an interview from Appleton, Wisconsin. Thrivent manages about $70 billion, including 5.3 million shares of Cisco. ``Growth in the high single digits is probably something they can maintain.''

To contact the reporter on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net

Last Updated: August 5, 2008 19:38 EDT