The US technology giant reported a profit of $982m, or 14 cents a share, up 27% on the same quarter last year.

The results were broadly in line with Wall Street expectations.

But Cisco's share price tumbled on Wednesday, falling $1.21, or 6.42%, to $17.65, reflecting concern that its profit growth was coming from cost savings rather than sales.

'Strong balance sheet'

Cisco shares have gained more than 30% in the past three months as investors sensed a sustained recovery in the company's performance.

But they closed down 40 cents to $18.86 on Tuesday and fell a further 6.89% to $17.56 in early trade on Wednesday.

The share slide dashed hopes Cisco would break the $20 barrier for the first time in 18 months.

"Cisco has excellent execution, a strong balance sheet, tight cost controls, and a superior competitive position," said analyst Sam Wilson with JMP Securities.

"Against that, it has an end market that doesn't appear to be growing and a valuation that is not compelling."

Challenging market

He said the share price seemed too high for current market conditions.

"With a company as large as Cisco, we would like to see a broader recovery before we recommend a more positive stance," Mr Wilson wrote in a recent note to clients.

Sales came in at $4.7bn for the three months to the end of July, down slightly from revenue of $4.8bn a year ago.

"We are pleased to report another solid quarter in a challenging market," Cisco CEO John Chambers said in a statement.

Cutting costs

Cisco makes the routers, switches and other data networking products are used to direct traffic through the internet.

Its customers include corporations, educational institutions, and governments.

Once the star of the high-tech sector - and briefly the world's most valuable company - Cisco crashed to earth when the dot.com bubble burst.

It has since drastically cut costs - including more than 8,500 jobs - and focused more attention on other business opportunities.