updated 5/8/2007 6:40:34 PM ET 2007-05-08T22:40:34

Cisco Systems Inc.’s fiscal third-quarter profit surged 34 percent as widespread networking upgrades and consumers’ thirst for more bandwidth continued to fuel the company’s robust growth.

The company narrowly beat Wall Street’s expectations. However, the report disappointed investors hoping for more from the tech bellwether. Cisco’s stock, which had climbed 8 percent in the last month, plunged in after-hours trading.

Net income for the three months ended April 28 was $1.87 billion, or 30 cents per share, compared with $1.4 billion, or 22 cents per share, during the same period last year.

Excluding one-time charges, San Jose-based Cisco earned 34 cents a share, a penny higher than analysts surveyed by Thomson Financial were expecting.

Cisco, the world’s largest provider of the routers and switches for directing data traffic over computer networks, rang up $8.87 in billion in sales during the quarter, including a $752 million boost from cable television box seller Scientific-Atlanta Inc.

Revenue grew 21 percent over last year and topped the $8.76 billion that analysts were expecting.

“Our success is based on the ability to foresee market transitions, which has enabled us to deliver the right products for today’s market opportunities and prepares us to take advantage of new opportunities in the future,” Cisco Chief Executive John Chambers said in a statement.

Cisco has profited from hearty demand for its products as more people come online worldwide and bandwidth-intensive multimedia downloads suck up more network capacity.

However, some financial analysts have expressed fears about Cisco’s ability to keep up its rapid expansion.

While sales in most segments are growing in the double digits, a sudden slowdown has appeared in a key area of Cisco’s business — orders from U.S. businesses — that has spooked investors.

Cisco’s U.S. enterprise segment grew 20 percent in the first three months of the fiscal year but has since contracted to mid-single digit growth.

Cisco management is optimistic it can maintain the overall expansion of its business.

The company expects sales to grow 15 percent to 16 percent in the fourth quarter to $9.2 billion to $9.3 billion. That’s slightly lower than the $9.33 billion anticipated by analysts.

Cisco is expecting gross margins to remain flat at about 64.5 percent in the current quarter.

Cisco shares finished regular-session trading up 55 cents, or nearly 2 percent, to $28.36. In after-hours trading, the stock fell about 5 percent.

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