Wall Street Watch: Cisco Earnings Indicate an Economy En Route to Growth

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Cisco systemsCisco (CSCO) is starting to step up.

The tech bellwether that provides networking equipment including routers and switches posted better than expected quarterly results after Tuesday's market close.

Revenue climbed 6% to $11.9 billion, and adjusted earnings rose 12% to $0.48 a share. These may not seem like major steps forward, but analysts were settling for a profit of $0.46 a share on $11.8 billion in revenue. History would indicate that they probably saw this coming. Cisco has now landed just ahead of Wall Street's profit targets for 19 consecutive quarters.

This is welcome news for more than just Cisco shareholders -- it's good news for all investors. Cisco is a great proxy for Corporate America. Cisco argues that it's at the center of the mobile, cloud, and video trends. It's the leader in gear that makes networking connectivity possible.

If Cisco is holding up well it means that companies are feeling comfortable enough to upgrade their networking equipment.

Things haven't always been easy for Cisco, but its sustainability has never been in doubt. Cisco closed out the year with $45 billion in cash. Sure, a lot of that is locked up overseas to avoid repatriation taxes, but it's still a great cushion for the company to have. Cisco has been cracking open that piggy bank to use money on small acquisitions as well as buying back shares and shelling out a modest dividend.

Cisco didn't provide an outlook for the current quarter, but the past -- for now -- is encouraging.

Other Things Worth Watching

• Advanced Micro Devices (AMD) is not for sale, but thanks for asking. Shares of the PC chip maker climbed on Tuesday after a Reuters report claimed that the company had hired an investment banker to explore strategic options that may include either a sale of the company or of some of its assets. AMD spoke up on Tuesday -- after the market close -- to set the speculation straight. AMD has no intention of exploring alternatives. It is confident in its model and current strategy.

• Retail stock investors hungry for growth may want to try China to satisfy their speedster pangs. Vipshop Holdings Limited (VIPS) -- an online discount retailer for brands in China -- posted quarterly results on Tuesday night. Net revenue nearly tripled to $155.9 million, fueled by a 174% surge in its number of active customers. The bad news is that Vipshop isn't making a lot of money off of that growth. It posted a small adjusted operating loss for the period.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Cisco Systems.

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Delaware Jack

Even with the even deepening, Sickly Barack Obama economy .... Liberals continue to stick their oversized heads & egos in the ground .....even in the face of stark reality >>> ... " LONDON - The eurozone has slipped back into Recession for a second time in four years as third quarter gross domestic product shrank by 0.1%, following a second quarter decline of 0.2%. Eurostat's first estimate of GDP for the three months to September showed the Deep Recession that has gripped southern Europe is beginning to affect the core of the 17-nation currency area, " .. Wecome to the Blue States, Democrats & Barack Obama's Newly Constituted United Socialist States of America ...... where your dollar will eventually be worth 10 cents or less and the government will control every aspect of your miserable lives ! .. And so it goes ...

November 15 2012 at 6:42 AM Report abuse rate up rate down Reply
mn4470

For a long term "righting of the ship", the good middle class jobs or the pre-early nineties must be replaced. Otherwise all the growth forecasts are just going to end up being blips on the screen, not sustained growth.
You cannot replace a good factory, textile, trade job with "welcome to Walmart" and hope to succeed when the pay differential is so wide

November 15 2012 at 12:50 AM Report abuse rate up rate down Reply
mccglf

One of the dumbest Motley articles in ages. Cisco has not been a proxy for anything in corporate America for the past decade. Extropolating corporate growth prospects from Cisco's earnings is laughable. This must be the writer's last ditch effort to gain notoriety. Sorry pal....you failed.

November 14 2012 at 11:07 PM Report abuse -1 rate up rate down Reply
George

More lies on huff & puff. wall street criminals playing with lies misleading the market as long as they make a buck. More red today which seems to be the norm anymore. Glad my money hasn't been with them in decades.

November 14 2012 at 6:31 PM Report abuse -2 rate up rate down Reply
bch313

Wrong again!

November 14 2012 at 5:20 PM Report abuse -1 rate up rate down Reply
Delaware Jack

-184.92 sure is an indictor all right .. That you are Cuckoo for Cocoa Puffs ! LMAO !

November 14 2012 at 4:48 PM Report abuse rate up rate down Reply
sal1103

Type your comment hereCisco is doubtfully good for 21 in a year . It's an old tired stock and means nothing . Talk to you all at dow 12,000.

November 14 2012 at 4:41 PM Report abuse rate up rate down Reply
howlar2

The stock market, which supposedly buys the future, isn't buying it.

November 14 2012 at 4:27 PM Report abuse +2 rate up rate down Reply
teltech544

Ge. When people thought Romney was going to be President the market was going up. Now that the election is over and Osama won, the market is going down. Yet yesterday the news reports were saying the market was poised to go up. Yet the market has gone down. Sounds like media is trying to influence the trend but cannot. Is it because investors have gotten wise?

November 14 2012 at 4:19 PM Report abuse rate up rate down Reply
1 reply to teltech544's comment
howlar2

I LOVE the Osama comment.

November 14 2012 at 4:27 PM Report abuse rate up rate down Reply
wwkenwayne

stock market is going down, down, down. if the fiscal cliff is not corrected. We can all kiss our portfolios, goodbye.

November 14 2012 at 2:31 PM Report abuse -2 rate up rate down Reply