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Cisco Q3 revenue outlook strong after Q2 beat

By Nicola Leske

(Reuters) - Network equipment maker Cisco Systems Inc promised further revenue growth after its second quarter results beat estimates, thanks to a restructuring, leading to a dividend increase.

The company, a sector bellwether because of its global scale and diverse client base, forecast 5 to 7 percent growth in fiscal third-quarter revenue.

That translates into a sales outlook of $11.4 billion to $11.6 billion, matching or slightly exceeding Wall Street's average forecast of $11.46 billion.

Executives also forecast gross margins of 61.5 to 62 percent in the fiscal third quarter ending April.

"Broadly speaking, people expected a good quarter. This is probably a little better than expected and the dividend is an added surprise," said Mizuho Securities analyst Joanna Makris.

Revenue rose 10.6 percent from the year-ago quarter to $11.5 billion. Analysts on average were expecting $11.23 billion.

Net income grew to $2.2 billion, or 40 cents per share, from $1.5 billion, or 27 cents share, a year earlier.

Excluding items, earnings were 47 cents per share, beating the average estimate of 43 cents a share, as compiled by Thomson Reuters I/B/E/S.

Cisco said on Wednesday it plans to pay a quarterly dividend of $0.08 per common share, up 2 cents from the previous quarter.

"Our operational focus continues to yield positive results - we hit our billion dollar expense reduction a quarter early," Chief Executive John Chambers said in a statement on Wednesday.

Cisco last year scaled back on consumer businesses and laid off thousands in a sweeping 4-month overhaul, aiming to cut expenses by $1 billion.

Cisco's core business is routers and switches, which direct Internet traffic, but the company has also focused on data centers, enabling and providing cloud computing technology and video platforms.

(Reporting By Nicola Leske in New York; Additional reporting by Alexei Oreskovic in San Francisco; Editing by Richard Chang)

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